Is American States Water Co (AWR) A Good Stock To Buy?

We view hedge fund activity in the stock unfavorable, but in this case there was only a single hedge fund selling its entire position: Springbok Capital. One hedge fund selling its entire position doesn’t always imply a bearish intent. Theoretically a hedge fund may decide to sell a promising position in order to invest the proceeds in a more promising idea. However, we don’t think this is the case in this case because only one of the 800+ hedge funds tracked by Insider Monkey identified as a viable investment and initiated a position in the stock (that fund was Two Sigma Advisors).

Let’s go over hedge fund activity in other stocks similar to American States Water Co (NYSE:AWR). We will take a look at Innospec Inc. (NASDAQ:IOSP), Dynegy Inc. (NYSE:DYN), Grupo Financiero Galicia S.A. (ADR) (NASDAQ:GGAL), and Ladder Capital Corp (NYSE:LADR). This group of stocks’ market valuations match AWR’s market valuation.

As you can see these stocks had an average of 19 hedge funds with bullish positions and the average amount invested in these stocks was $278 million. That figure was $42 million in AWR’s case. Dynegy Inc. (NYSE:DYN) is the most popular stock in this table. On the other hand Ladder Capital Corp (NYSE:LADR) is the least popular one with only 8 bullish hedge fund positions. Compared to these stocks American States Water Co (NYSE:AWR) is even less popular than LADR. Considering that hedge funds aren’t fond of this stock in relation to other companies analyzed in this article, it may be a good idea to analyze it in detail and understand why the smart money isn’t behind this stock. This isn’t necessarily bad news. Although it is possible that hedge funds may think the stock is overpriced and view the stock as a short candidate, they may not be very familiar with the bullish thesis. In either case more research is warranted.

Disclosure: None