Black Hills Corp (BKH): Are Hedge Funds Right About This Stock?

Black Hills Corp (NYSE:BKH) was in 7 hedge funds’ portfolio at the end of March. BKH investors should be aware of a decrease in enthusiasm from smart money in recent months. There were 9 hedge funds in our database with BKH holdings at the end of the previous quarter.

To most market participants, hedge funds are perceived as slow, outdated investment vehicles of the past. While there are over 8000 funds with their doors open at present, we at Insider Monkey choose to focus on the bigwigs of this group, around 450 funds. Most estimates calculate that this group oversees most of the smart money’s total capital, and by paying attention to their best stock picks, we have revealed a number of investment strategies that have historically outpaced the market. Our small-cap hedge fund strategy outpaced the S&P 500 index by 18 percentage points per annum for a decade in our back tests, and since we’ve started sharing our picks with our subscribers at the end of August 2012, we have topped the S&P 500 index by 23.3 percentage points in 8 months (check out a sample of our picks).

Equally as important, bullish insider trading activity is a second way to parse down the stock market universe. Obviously, there are lots of incentives for an upper level exec to downsize shares of his or her company, but only one, very simple reason why they would buy. Various academic studies have demonstrated the useful potential of this method if piggybackers understand what to do (learn more here).

Now, we’re going to take a peek at the recent action surrounding Black Hills Corp (NYSE:BKH).

Hedge fund activity in Black Hills Corp (NYSE:BKH)

At Q1’s end, a total of 7 of the hedge funds we track were long in this stock, a change of -22% from the first quarter. With the smart money’s positions undergoing their usual ebb and flow, there exists a few notable hedge fund managers who were boosting their stakes meaningfully.

Of the funds we track, Mario Gabelli’s GAMCO Investors had the biggest position in Black Hills Corp (NYSE:BKH), worth close to $29.3 million, accounting for 0.2% of its total 13F portfolio. On GAMCO Investors’s heels is Cliff Asness of AQR Capital Management, with a $2.5 million position; less than 0.1%% of its 13F portfolio is allocated to the company. Other hedgies with similar optimism include Jim Simons’s Renaissance Technologies, Gregg J. Powers’s Private Capital Management and Matthew Hulsizer’s PEAK6 Capital Management.

Seeing as Black Hills Corp (NYSE:BKH) has faced a declination in interest from the smart money, we can see that there was a specific group of hedge funds who were dropping their full holdings heading into Q2. It’s worth mentioning that Israel Englander’s Millennium Management sold off the largest position of the 450+ funds we key on, comprising an estimated $14.1 million in stock., and Glenn Russell Dubin of Highbridge Capital Management was right behind this move, as the fund dumped about $0.9 million worth. These bearish behaviors are interesting, as aggregate hedge fund interest fell by 2 funds heading into Q2.

How are insiders trading Black Hills Corp (NYSE:BKH)?

Insider trading activity, especially when it’s bullish, is at its handiest when the company in question has seen transactions within the past six months. Over the last half-year time period, Black Hills Corp (NYSE:BKH) has seen zero unique insiders purchasing, and zero insider sales (see the details of insider trades here).

Let’s check out hedge fund and insider activity in other stocks similar to Black Hills Corp (NYSE:BKH). These stocks are IDACORP Inc (NYSE:IDA), Portland General Electric Company (NYSE:POR), Atlantic Power Corp (NYSE:AT), UNS Energy Corp (NYSE:UNS), and UIL Holdings Corporation (NYSE:UIL). This group of stocks belong to the electric utilities industry and their market caps resemble BKH’s market cap.