In this article we will take a look at whether hedge funds think Companhia Paranaense de Energia – COPEL (NYSE:ELP) is a good investment right now. We check hedge fund and billionaire investor sentiment before delving into hours of research. Hedge funds spend millions of dollars on Ivy League graduates, unconventional data sources, expert networks, and get tips from investment bankers and industry insiders. Sure they sometimes fail miserably, but their consensus stock picks historically outperformed the market after adjusting for known risk factors.
Hedge fund interest in Companhia Paranaense de Energia – COPEL (NYSE:ELP) shares was flat at the end of last quarter. This is usually a negative indicator. At the end of this article we will also compare ELP to other stocks including Envestnet Inc (NYSE:ENV), Vertiv Holdings Co (NYSE:VRT), and Continental Resources, Inc. (NYSE:CLR) to get a better sense of its popularity.
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How are hedge funds trading Companhia Paranaense de Energia – COPEL (NYSE:ELP)?
At the end of the first quarter, a total of 7 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 0% from the previous quarter. By comparison, 10 hedge funds held shares or bullish call options in ELP a year ago. With hedge funds’ capital changing hands, there exists a few noteworthy hedge fund managers who were adding to their holdings substantially (or already accumulated large positions).
Among these funds, Renaissance Technologies held the most valuable stake in Companhia Paranaense de Energia – COPEL (NYSE:ELP), which was worth $21.5 million at the end of the third quarter. On the second spot was Arrowstreet Capital which amassed $15.3 million worth of shares. D E Shaw, Two Sigma Advisors, and AQR Capital Management were also very fond of the stock, becoming one of the largest hedge fund holders of the company. In terms of the portfolio weights assigned to each position Arrowstreet Capital allocated the biggest weight to Companhia Paranaense de Energia – COPEL (NYSE:ELP), around 0.04% of its 13F portfolio. Renaissance Technologies is also relatively very bullish on the stock, designating 0.02 percent of its 13F equity portfolio to ELP.
Because Companhia Paranaense de Energia – COPEL (NYSE:ELP) has experienced falling interest from hedge fund managers, we can see that there exists a select few money managers who were dropping their positions entirely by the end of the first quarter. At the top of the heap, Mike Vranos’s Ellington said goodbye to the largest stake of all the hedgies monitored by Insider Monkey, totaling close to $0.4 million in stock, and Paul Marshall and Ian Wace’s Marshall Wace LLP was right behind this move, as the fund cut about $0.1 million worth. These transactions are interesting, as total hedge fund interest stayed the same (this is a bearish signal in our experience).
Let’s check out hedge fund activity in other stocks – not necessarily in the same industry as Companhia Paranaense de Energia – COPEL (NYSE:ELP) but similarly valued. We will take a look at Envestnet Inc (NYSE:ENV), Vertiv Holdings Co (NYSE:VRT), Continental Resources, Inc. (NYSE:CLR), and Stantec Inc. (NYSE:STN). This group of stocks’ market valuations are closest to ELP’s market valuation.
|Ticker||No of HFs with positions||Total Value of HF Positions (x1000)||Change in HF Position|
View table here if you experience formatting issues.
As you can see these stocks had an average of 23.5 hedge funds with bullish positions and the average amount invested in these stocks was $184 million. That figure was $45 million in ELP’s case. Vertiv Holdings Co (NYSE:VRT) is the most popular stock in this table. On the other hand Stantec Inc. (NYSE:STN) is the least popular one with only 12 bullish hedge fund positions. Compared to these stocks Companhia Paranaense de Energia – COPEL (NYSE:ELP) is even less popular than STN. Hedge funds clearly dropped the ball on ELP as the stock delivered strong returns, though hedge funds’ consensus picks still generated respectable returns. Our calculations showed that top 10 most popular stocks among hedge funds returned 41.4% in 2019 and outperformed the S&P 500 ETF (SPY) by 10.1 percentage points. These stocks gained 13.9% in 2020 through June 10th and still beat the market by 14.2 percentage points. A small number of hedge funds were also right about betting on ELP as the stock returned 28% so far in the second quarter and outperformed the market by an even larger margin.
Disclosure: None. This article was originally published at Insider Monkey.