Is Companhia Energetica Minas Gerais (ADR) (NYSE:CIG) a bargain? Investors who are in the know are taking a bearish view. The number of bullish hedge fund positions dropped by 2 recently.
In the eyes of most traders, hedge funds are viewed as underperforming, outdated investment vehicles of the past. While there are greater than 8000 funds trading at the moment, we at Insider Monkey look at the upper echelon of this group, close to 450 funds. It is widely believed that this group oversees most of the smart money’s total capital, and by paying attention to their best picks, we have revealed a few investment strategies that have historically outpaced the S&P 500 index. Our small-cap hedge fund strategy outpaced the S&P 500 index by 18 percentage points annually 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 outclassed the S&P 500 index by 25 percentage points in 6.5 month (see all of our picks from August).
Just as key, optimistic insider trading activity is a second way to break down the investments you’re interested in. Just as you’d expect, there are a variety of incentives for an insider to cut shares of his or her company, but only one, very obvious reason why they would behave bullishly. Plenty of empirical studies have demonstrated the useful potential of this strategy if “monkeys” know where to look (learn more here).
Consequently, let’s take a gander at the recent action regarding Companhia Energetica Minas Gerais (ADR) (NYSE:CIG).
How have hedgies been trading Companhia Energetica Minas Gerais (ADR) (NYSE:CIG)?
Heading into 2013, a total of 15 of the hedge funds we track were bullish in this stock, a change of -12% from the third quarter. With the smart money’s positions undergoing their usual ebb and flow, there exists a select group of key hedge fund managers who were increasing their holdings meaningfully.
According to our comprehensive database, Discovery Capital Management, managed by Rob Citrone, holds the biggest position in Companhia Energetica Minas Gerais (ADR) (NYSE:CIG). Discovery Capital Management has a $22 million position in the stock, comprising 0.3% of its 13F portfolio. Coming in second is Jim Simons of Renaissance Technologies, with a $21 million position; 0.3% of its 13F portfolio is allocated to the stock. Some other hedgies that are bullish include Cliff Asness’s AQR Capital Management, Peter Rathjens, Bruce Clarke and John Campbell’s Arrowstreet Capital and Howard Marks’s Oaktree Capital Management.
Since Companhia Energetica Minas Gerais (ADR) (NYSE:CIG) has faced a declination in interest from the smart money, it’s easy to see that there were a few hedge funds that decided to sell off their full holdings heading into 2013. It’s worth mentioning that Peter J. Eichler Jr.’s Aletheia Research and Management sold off the biggest position of all the hedgies we watch, comprising close to $2 million in stock.. J. Alan Reid, Jr.’s fund, Forward Management, also dropped its stock, about $1 million worth. These transactions are interesting, as total hedge fund interest dropped by 2 funds heading into 2013.
Insider trading activity in Companhia Energetica Minas Gerais (ADR) (NYSE:CIG)
Insider buying is particularly usable when the company in focus has experienced transactions within the past 180 days. Over the last half-year time frame, Companhia Energetica Minas Gerais (ADR) (NYSE:CIG) 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 Companhia Energetica Minas Gerais (ADR) (NYSE:CIG). These stocks are DTE Energy Co (NYSE:DTE), Entergy Corporation (NYSE:ETR), The AES Corporation (NYSE:AES), Calpine Corporation (NYSE:CPN), and Wisconsin Energy Corporation (NYSE:WEC). This group of stocks are in the electric utilities industry and their market caps are closest to CIG’s market cap.
|Company Name||# of Hedge Funds||# of Insiders Buying||# of Insiders Selling|
|DTE Energy Co (NYSE:DTE)||10||1||11|
|Entergy Corporation (NYSE:ETR)||13||0||1|
|The AES Corporation (NYSE:AES)||19||2||1|
|Calpine Corporation (NYSE:CPN)||22||0||0|
|Wisconsin Energy Corporation (NYSE:WEC)||10||1||6|
With the results shown by our time-tested strategies, retail investors should always pay attention to hedge fund and insider trading sentiment, and Companhia Energetica Minas Gerais (ADR) (NYSE:CIG) is no exception.
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