The Southern Company (NYSE:SO) shareholders have witnessed a decrease in enthusiasm from smart money in recent months.
At the moment, there are dozens of metrics market participants can use to analyze Mr. Market. A duo of the most useful are hedge fund and insider trading movement. At Insider Monkey, our research analyses have shown that, historically, those who follow the best picks of the top investment managers can outpace the broader indices by a significant margin (see just how much).
Equally as important, optimistic insider trading activity is a second way to break down the stock market universe. As the old adage goes: there are lots of incentives for an executive to drop shares of his or her company, but just one, very obvious reason why they would behave bullishly. Plenty of empirical studies have demonstrated the valuable potential of this strategy if you understand where to look (learn more here).
With all of this in mind, let’s take a glance at the latest action surrounding The Southern Company (NYSE:SO).
What have hedge funds been doing with The Southern Company (NYSE:SO)?
Heading into 2013, a total of 13 of the hedge funds we track held long positions in this stock, a change of -28% from the previous quarter. With hedge funds’ sentiment swirling, there exists an “upper tier” of key hedge fund managers who were increasing their holdings considerably.
According to our comprehensive database, Duquesne Capital, managed by Stanley Druckenmiller, holds the biggest position in The Southern Company (NYSE:SO). Duquesne Capital has a $50 million position in the stock, comprising 3.9% of its 13F portfolio. Coming in second is Winton Capital Management, managed by David Harding, which held a $27 million position; the fund has 0.7% of its 13F portfolio invested in the stock. Other peers that hold long positions include Sean Cullinan’s Point State Capital, Cliff Asness’s AQR Capital Management and Israel Englander’s Millennium Management.
Due to the fact that The Southern Company (NYSE:SO) has faced a declination in interest from hedge fund managers, it’s easy to see that there is a sect of fund managers that elected to cut their positions entirely at the end of the year. Intriguingly, Phill Gross and Robert Atchinson’s Adage Capital Management sold off the largest position of all the hedgies we track, worth about $55 million in stock.. Louis Navellier’s fund, Navellier & Associates, also dumped its stock, about $44 million worth. These bearish behaviors are intriguing to say the least, as aggregate hedge fund interest fell by 5 funds at the end of the year.
What have insiders been doing with The Southern Company (NYSE:SO)?
Bullish insider trading is at its handiest when the company in focus has seen transactions within the past 180 days. Over the latest half-year time period, The Southern Company (NYSE:SO) has seen 1 unique insiders purchasing, and 4 insider sales (see the details of insider trades here).
Let’s also take a look at hedge fund and insider activity in other stocks similar to The Southern Company (NYSE:SO). These stocks are PG&E Corporation (NYSE:PCG), American Electric Power Company, Inc. (NYSE:AEP), Duke Energy Corp (NYSE:DUK), NextEra Energy, Inc. (NYSE:NEE), and Dominion Resources, Inc. (NYSE:D). This group of stocks belong to the electric utilities industry and their market caps are similar to SO’s market cap.
|Company Name||# of Hedge Funds||# of Insiders Buying||# of Insiders Selling|
|PG&E Corporation (NYSE:PCG)||14||0||7|
|American Electric Power Company, Inc. (NYSE:AEP)||16||2||1|
|Duke Energy Corp (NYSE:DUK)||20||0||3|
|NextEra Energy, Inc. (NYSE:NEE)||18||1||7|
|Dominion Resources, Inc. (NYSE:D)||11||0||2|
With the results exhibited by Insider Monkey’s tactics, everyday investors should always pay attention to hedge fund and insider trading sentiment, and The Southern Company (NYSE:SO) applies perfectly to this mantra.