Hedge Funds Are Selling Great Plains Energy Incorporated (GXP)

The market has been volatile as the Federal Reserve winds down its easy money policies. Small cap stocks have been hit hard as a result, as the Russell 2000 ETF (IWM) has underperformed the larger S&P 500 ETF (SPY) by more than 14 percentage points between June 25th and the end of October. SEC filings and hedge fund investor letters indicate that the smart money seems to be paring back their overall long exposure, and the funds’ movements is one of the reasons why the major indexes have retraced. In this article, we analyze what the smart money thinks of Great Plains Energy Incorporated (NYSE:GXP) and find out how it is affected by hedge funds’ moves.

Is Great Plains Energy Incorporated (NYSE:GXP) ready to rally soon? Hedge funds are in a pessimistic mood. The number of bullish hedge fund bets fell by 2 recently. GXP was in 11 hedge funds’ portfolios at the end of the third quarter of 2015. There were 13 hedge funds in our database with GXP positions at the end of the previous quarter. The level and the change in hedge fund popularity aren’t the only variables you need to analyze to decipher hedge funds’ perspectives. A stock may witness a boost in popularity, but it may still be less popular than similarly priced stocks. That’s why at the end of this article we will examine companies such as Steel Dynamics, Inc. (NASDAQ:STLD), SolarCity Corp (NASDAQ:SCTY), and GoPro Inc (NASDAQ:GPRO) to gather more data points.

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Now, we’re going to take a look at the latest action regarding Great Plains Energy Incorporated (NYSE:GXP).

Hedge fund activity in Great Plains Energy Incorporated (NYSE:GXP)

Heading into Q4, a total of 11 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -15% from the previous quarter. With hedge funds’ capital changing hands, there exists an “upper tier” of noteworthy hedge fund managers who were boosting their holdings meaningfully (or already accumulated large positions).

According to Insider Monkey’s hedge fund database, Lee Munder’s Lee Munder Capital Group has the number one position in Great Plains Energy Incorporated (NYSE:GXP), worth close to $50.5 million, corresponding to 1.1% of its total 13F portfolio. Coming in second is Joe Huber’s Huber Capital Management, with a $37.6 million position; the fund has 1.3% of its 13F portfolio invested in the stock. Some other members of the smart money that are bullish encompass Mario Gabelli’s GAMCO Investors, Jim Simons’ Renaissance Technologies and Cliff Asness’ AQR Capital Management.

Since Great Plains Energy Incorporated (NYSE:GXP) has experienced falling interest from the entirety of the hedge funds we track, logic holds that there is a sect of hedgies that elected to cut their full holdings in the third quarter. It’s worth mentioning that Ray Dalio’s Bridgewater Associates dumped the largest stake of the “upper crust” of funds watched by Insider Monkey, worth close to $0.4 million in stock, and Paul Tudor Jones’ Tudor Investment Corp was right behind this move, as the fund dumped about $0.3 million worth of shares. These bearish behaviors are interesting, as total hedge fund interest dropped by 2 funds in the third quarter.

Let’s now review hedge fund activity in other stocks – not necessarily in the same industry as Great Plains Energy Incorporated (NYSE:GXP) but similarly valued. We will take a look at Steel Dynamics, Inc. (NASDAQ:STLD), SolarCity Corp (NASDAQ:SCTY), GoPro Inc (NASDAQ:GPRO), and AECOM Technology Corp (NYSE:ACM). All of these stocks’ market caps resemble GXP’s market cap.

As you can see these stocks had an average of 25 hedge funds with bullish positions and the average amount invested in these stocks was $552 million. That figure was $148 million in GXP’s case. SolarCity Corp (NASDAQ:SCTY) is the most popular stock in this table. On the other hand AECOM Technology Corp (NYSE:ACM) is the least popular one with only 22 bullish hedge fund positions. Compared to these stocks Great Plains Energy Incorporated (NYSE:GXP) is even less popular than ACM. Considering that hedge funds aren’t fond of this stock in relation to other companies mentioned in this article, it may be a good idea to analyze 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.