The third-quarter stock market correction has turned out to resemble the situation observed during the Asian financial crisis of 1997. The two relatively short-lived corrections occurred at a time with stable interest rates, falling commodity markets, with strong-performing technology and healthcare sectors, and struggling energy sector. Similarly, the two corrections followed long periods without a correction, which had to come sooner or later and it did. Even so, several prominent hedge fund investors publicly asserted their bearish view on the current state of the U.S. equity markets, suggesting that they significantly cut their exposure to equities during the latest quarter. Having said that, it would be worthwhile to take a look at the hedge fund sentiment on AGL Resources Inc. (NYSE:GAS) in order to identify whether reputable and successful top money managers continue to believe in its potential.
AGL Resources Inc. (NYSE:GAS) has experienced an increase in activity from the world’s largest hedge funds in recent months. The level and the change in hedge fund popularity aren’t the only variables you need to analyze to decipher hedge funds’ perspectives. A stock may witness a boost in popularity, but it may still be less popular than similarly priced stocks. That’s why at the end of this article, we will examine companies such as Gildan Activewear Inc (USA) (NYSE:GIL), Comerica Incorporated (NYSE:CMA), and Santander Consumer USA Holdings Inc (NYSE:SC) to gather more data points.
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To the average investor, there are a lot of metrics market participants employ to size up stocks. Two of the most innovative metrics are hedge fund and insider trading moves. We have shown that, historically, those who follow the best picks of the best investment managers can trounce the broader indices by a significant margin (see the details here).
Keeping this in mind, we’re going to take a peek at the fresh action surrounding AGL Resources Inc. (NYSE:GAS).
What have hedge funds been doing with AGL Resources Inc. (NYSE:GAS)?
Heading into Q4, a total of 30 of the hedge funds tracked by Insider Monkey were bullish on this stock, an increase of 7% from the second quarter. With hedgies’ sentiment swirling, there exists an “upper tier” of notable hedge fund managers who were boosting their stakes significantly (or already accumulated large positions).
Of the funds tracked by Insider Monkey, Phill Gross and Robert Atchinson’s Adage Capital Management has the number one position in AGL Resources Inc. (NYSE:GAS), worth close to $119.5 million, accounting for 0.3% of its total 13F portfolio. The second largest stake is held by Luminus Management, led by Jonathan Barrett and Paul Segal, holding a $80.8 million position; 2.5% of its 13F portfolio is allocated to the company. Some other hedge funds and institutional investors that are bullish contain Israel Englander’s Millennium Management, Alec Litowitz and Ross Laser’s Magnetar Capital, and Glenn Russell Dubin’s Highbridge Capital Management.
As aggregate interest increased, some big names have been driving this bullishness. Magnetar Capital, managed by Alec Litowitz and Ross Laser, assembled the largest position in AGL Resources Inc. (NYSE:GAS). Magnetar Capital had $61.6 million invested in the company at the end of the quarter. John Orrico’s Water Island Capital also initiated a $24.9 million position during the quarter. The other funds with brand new GAS positions are Millennium Management Subsidiary’s Green Arrow Capital Management, Stuart J. Zimmer’s Zimmer Partners, and Jacob Gottlieb’s Visium Asset Management.
Let’s also examine hedge fund activity in other stocks similar to AGL Resources Inc. (NYSE:GAS). These stocks are Gildan Activewear Inc (USA) (NYSE:GIL), Comerica Incorporated (NYSE:CMA), Santander Consumer USA Holdings Inc (NYSE:SC), and Varian Medical Systems, Inc. (NYSE:VAR). This group of stocks’ market caps matches AGL Resources Inc. (NYSE:GAS)’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| GIL | 19 | 203148 | 8 |
| CMA | 40 | 745881 | 1 |
| SC | 35 | 1044651 | 0 |
| VAR | 27 | 472014 | 5 |
As you can see, these stocks had an average of 30 hedge funds with bullish positions and the average amount invested in these stocks was $616 million. That figure was $528 million in AGL Resources Inc. (NYSE:GAS)’s case. Comerica Incorporated (NYSE:CMA) is the most popular stock in this table. On the other hand, Gildan Activewear Inc (USA) (NYSE:GIL) is the least popular one with only 19 bullish hedge fund positions. AGL Resources Inc. (NYSE:GAS) is not the least popular stock in this group, but hedge fund interest is still below average. This is a slightly negative signal and we’d rather spend our time researching stocks that hedge funds are piling on. In this regard, Comerica Incorporated (NYSE:CMA) might be a better candidate to consider a long position.
