As we already know from media reports and hedge fund investor letters, hedge funds delivered their best returns in a decade. Most investors who decided to stick with hedge funds after a rough 2018 recouped their losses by the end of the fourth quarter of 2019. A significant number of hedge funds continued their strong performance in 2020 and 2021 as well. We get to see hedge funds’ thoughts towards the market and individual stocks by aggregating their quarterly portfolio movements and reading their investor letters. In this article, we will particularly take a look at what hedge funds think about PNM Resources, Inc. (NYSE:PNM).
Is PNM Resources, Inc. (NYSE:PNM) a good stock to buy now? The smart money was getting less optimistic. The number of bullish hedge fund bets fell by 4 in recent months. PNM Resources, Inc. (NYSE:PNM) was in 26 hedge funds’ portfolios at the end of the first quarter of 2021. The all time high for this statistic is 30. Our calculations also showed that PNM isn’t among the 30 most popular stocks among hedge funds (click for Q1 rankings). There were 30 hedge funds in our database with PNM holdings at the end of December.
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Do Hedge Funds Think PNM Is A Good Stock To Buy Now?
At the end of the first quarter, a total of 26 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -13% from the previous quarter. On the other hand, there were a total of 22 hedge funds with a bullish position in PNM a year ago. With hedgies’ sentiment swirling, there exists a select group of noteworthy hedge fund managers who were upping their holdings significantly (or already accumulated large positions).
According to Insider Monkey’s hedge fund database, Alec Litowitz and Ross Laser’s Magnetar Capital has the biggest position in PNM Resources, Inc. (NYSE:PNM), worth close to $156.9 million, amounting to 1.5% of its total 13F portfolio. Coming in second is Millennium Management, managed by Israel Englander, which holds a $106.4 million position; the fund has 0.1% of its 13F portfolio invested in the stock. Remaining professional money managers that are bullish comprise Mario Gabelli’s GAMCO Investors, D. E. Shaw’s D E Shaw and Simon Sadler’s Segantii Capital. In terms of the portfolio weights assigned to each position Ovata Capital Management allocated the biggest weight to PNM Resources, Inc. (NYSE:PNM), around 3.76% of its 13F portfolio. Segantii Capital is also relatively very bullish on the stock, earmarking 2.17 percent of its 13F equity portfolio to PNM.
Since PNM Resources, Inc. (NYSE:PNM) has faced a decline in interest from the aggregate hedge fund industry, we can see that there were a few hedge funds who sold off their full holdings in the first quarter. Interestingly, John Orrico’s Water Island Capital dropped the largest position of the 750 funds monitored by Insider Monkey, valued at close to $69.4 million in stock, and Dmitry Balyasny’s Balyasny Asset Management was right behind this move, as the fund cut about $42.6 million worth. These transactions are intriguing to say the least, as aggregate hedge fund interest was cut by 4 funds in the first quarter.
Let’s check out hedge fund activity in other stocks – not necessarily in the same industry as PNM Resources, Inc. (NYSE:PNM) but similarly valued. We will take a look at Axis Capital Holdings Limited (NYSE:AXS), Black Hills Corporation (NYSE:BKH), WD-40 Company (NASDAQ:WDFC), Arena Pharmaceuticals, Inc. (NASDAQ:ARNA), Yamana Gold Inc. (NYSE:AUY), Advanced Energy Industries, Inc. (NASDAQ:AEIS), and JBG SMITH Properties (NYSE:JBGS). This group of stocks’ market caps match PNM’s market cap.
|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 20.4 hedge funds with bullish positions and the average amount invested in these stocks was $308 million. That figure was $721 million in PNM’s case. Arena Pharmaceuticals, Inc. (NASDAQ:ARNA) is the most popular stock in this table. On the other hand JBG SMITH Properties (NYSE:JBGS) is the least popular one with only 11 bullish hedge fund positions. PNM Resources, Inc. (NYSE:PNM) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for PNM is 61.1. Stocks with higher number of hedge fund positions relative to other stocks as well as relative to their historical range receive a higher sentiment score. 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 5 most popular stocks among hedge funds returned 95.8% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 40 percentage points. These stocks gained 24% in 2021 through July 9th and beat the market again by 6.7 percentage points. Unfortunately PNM wasn’t nearly as popular as these 5 stocks and hedge funds that were betting on PNM were disappointed as the stock returned -0.1% since the end of March (through 7/9) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 5 most popular stocks among hedge funds as many of these stocks already outperformed the market since 2019.
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Disclosure: None. This article was originally published at Insider Monkey.