Edison International (EIX): Are Hedge Funds Right To Stay Away From This Stock?

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Judging by the fact that Edison International (NYSE:EIX) has experienced declining sentiment from the smart money, it’s safe to say that there lies a certain “tier” of money managers that slashed their positions entirely by the end of the third quarter. Interestingly, First Eagle Investment Management dumped the largest position of the 700 funds tracked by Insider Monkey, totaling about $8.1 million in stock, and Alex Snow’s Lansdowne Partners was right behind this move, as the fund cut about $7.4 million worth of shares. These moves are intriguing to say the least, as aggregate hedge fund interest fell by 1 fund by the end of the third quarter.

Let’s check out hedge fund activity in other stocks – not necessarily in the same industry as Edison International (NYSE:EIX) but similarly valued. We will take a look at LinkedIn Corp (NYSE:LNKD), Archer Daniels Midland Company (NYSE:ADM), Equity Residential (NYSE:EQR), and Norfolk Southern Corp. (NYSE:NSC). This group of stocks’ market caps resemble EIX’s market cap.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
LNKD 59 4838915 -7
ADM 24 676010 -2
EQR 20 794112 -5
NSC 36 758740 4

As you can see these stocks had an average of 34.75 hedge funds with bullish positions and the average amount invested in these stocks was $1.77 billion. That figure was $640 million in EIX’s case. LinkedIn Corp (NYSE:LNKD) is the most popular stock in this table. On the other hand Equity Residential (NYSE:EQR) is the least popular one with only 20 bullish hedge fund positions. Compared to these stocks Edison International (NYSE:EIX) is even less popular than EQR and has less money invested in it than any of the other four stocks. 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 study 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

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