Ameren Corporation (AEE) vs. Top 20 Hedge Fund Stocks in 2019

Amid an overall bull market, many stocks that smart money investors were collectively bullish on surged in 2019. Among them, Facebook and Microsoft ranked among the top 3 picks and these stocks gained 57%. Our research shows that most of the stocks that smart money likes historically generate strong risk-adjusted returns. That’s why we weren’t surprised when hedge funds’ top 20 large-cap stock picks generated a return of 41.1% in 2019 (through December 23rd) and outperformed the broader market benchmark by 10.1 percentage points.This is why following the smart money sentiment is a useful tool at identifying the next stock to invest in.

Ameren Corporation (NYSE:AEE) was in 30 hedge funds’ portfolios at the end of September. AEE investors should pay attention to an increase in enthusiasm from smart money in recent months. There were 18 hedge funds in our database with AEE holdings at the end of the previous quarter. Our calculations also showed that AEE isn’t among the 30 most popular stocks among hedge funds (click for Q3 rankings and see the video at the end of this article for Q2 rankings).

In the financial world there are a large number of tools investors have at their disposal to grade stocks. A pair of the most under-the-radar tools are hedge fund and insider trading indicators. We have shown that, historically, those who follow the top picks of the best fund managers can outperform the broader indices by a solid amount. Insider Monkey’s flagship best performing hedge funds strategy returned 91% since May 2014 and outperformed the Russell 2000 ETFs by nearly 40 percentage points. Our short strategy outperformed the S&P 500 short ETFs by 20 percentage points annually (see the details here). That’s why we believe hedge fund sentiment is a useful indicator that investors should pay attention to.

Jonathan Barrett Luminus Management

Jonathan Barrett of Luminus Management

We leave no stone unturned when looking for the next great investment idea. For example one of the most bullish analysts in America just put his money where his mouth is. He says, “I’m investing more today than I did back in early 2009.” So we check out his pitch. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. This December, we recommended Adams Energy as a one-way bet based on an under-the-radar fund manager’s investor letter and the stock is still extremely cheap despite already gaining 20 percent. With all of this in mind let’s view the fresh hedge fund action surrounding Ameren Corporation (NYSE:AEE).

How have hedgies been trading Ameren Corporation (NYSE:AEE)?

At the end of the third quarter, a total of 30 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 67% from the previous quarter. The graph below displays the number of hedge funds with bullish position in AEE over the last 17 quarters. So, let’s examine which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

When looking at the institutional investors followed by Insider Monkey, Renaissance Technologies has the biggest position in Ameren Corporation (NYSE:AEE), worth close to $448.7 million, corresponding to 0.4% of its total 13F portfolio. The second most bullish fund manager is Ken Griffin of Citadel Investment Group, with a $279.9 million position; the fund has 0.1% of its 13F portfolio invested in the stock. Other members of the smart money that are bullish comprise Israel Englander’s Millennium Management, Cliff Asness’s AQR Capital Management and Clint Carlson’s Carlson Capital. In terms of the portfolio weights assigned to each position Shelter Harbor Advisors allocated the biggest weight to Ameren Corporation (NYSE:AEE), around 8.09% of its 13F portfolio. Blackstart Capital is also relatively very bullish on the stock, designating 3.41 percent of its 13F equity portfolio to AEE.

Now, some big names have jumped into Ameren Corporation (NYSE:AEE) headfirst. Carlson Capital, managed by Clint Carlson, created the largest position in Ameren Corporation (NYSE:AEE). Carlson Capital had $55.1 million invested in the company at the end of the quarter. Jonathan Barrett and Paul Segal’s Luminus Management also made a $35 million investment in the stock during the quarter. The following funds were also among the new AEE investors: Sara Nainzadeh’s Centenus Global Management, Dmitry Balyasny’s Balyasny Asset Management, and Peter J. Hark’s Shelter Harbor Advisors.

Let’s check out hedge fund activity in other stocks similar to Ameren Corporation (NYSE:AEE). These stocks are TAL Education Group (NYSE:TAL), Match Group, Inc. (NASDAQ:MTCH), Northern Trust Corporation (NASDAQ:NTRS), and Boston Properties, Inc. (NYSE:BXP). All of these stocks’ market caps are closest to AEE’s market cap.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
TAL 20 1504129 -5
MTCH 41 1106508 10
NTRS 21 316167 -8
BXP 24 447838 1
Average 26.5 843661 -0.5

View table here if you experience formatting issues.

As you can see these stocks had an average of 26.5 hedge funds with bullish positions and the average amount invested in these stocks was $844 million. That figure was $1557 million in AEE’s case. Match Group, Inc. (NASDAQ:MTCH) is the most popular stock in this table. On the other hand TAL Education Group (NYSE:TAL) is the least popular one with only 20 bullish hedge fund positions. Ameren Corporation (NYSE:AEE) is not the most popular stock in this group but hedge fund interest is still above average. This is a slightly positive signal but we’d rather spend our time researching stocks that hedge funds are piling on. Our calculations showed that top 20 most popular stocks among hedge funds returned 41.1% in 2019 through December 23rd and outperformed the S&P 500 ETF (SPY) by 10.1 percentage points. Unfortunately AEE wasn’t nearly as popular as these 20 stocks and hedge funds that were betting on AEE were disappointed as the stock returned 19% in 2019 (through December 23rd) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 20 most popular stocks among hedge funds as many of these stocks already outperformed the market so far this year.
5 Most Popular Stocks Among Hedge Funds
Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.

Disclosure: None. This article was originally published at Insider Monkey.