Hedge Funds Are Selling Pepco Holdings, Inc. (POM)

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Pepco Holdings, Inc. (NYSE:POM) was in 6 hedge funds’ portfolio at the end of December. POM shareholders have witnessed a decrease in activity from the world’s largest hedge funds lately. There were 10 hedge funds in our database with POM positions at the end of the previous quarter.


In the eyes of most investors, hedge funds are viewed as underperforming, outdated financial vehicles of yesteryear. While there are greater than 8000 funds with their doors open at the moment, we at Insider Monkey look at the bigwigs of this club, close to 450 funds. It is widely believed that this group has its hands on most of the smart money’s total capital, and by tracking their highest performing equity investments, we have identified a number of investment strategies that have historically outperformed the broader indices. Our small-cap hedge fund strategy outstripped the S&P 500 index by 18 percentage points annually for a decade in our back tests, and since we’ve began to sharing our picks with our subscribers at the end of August 2012, we have trumped the S&P 500 index by 24 percentage points in 7 months (check out a sample of our picks).

Just as beneficial, optimistic insider trading sentiment is a second way to parse down the world of equities. There are a number of motivations for a bullish insider to sell shares of his or her company, but only one, very obvious reason why they would behave bullishly. Plenty of academic studies have demonstrated the useful potential of this strategy if shareholders understand what to do (learn more here).

Now, we’re going to take a look at the key action regarding Pepco Holdings, Inc. (NYSE:POM).

Hedge fund activity in Pepco Holdings, Inc. (NYSE:POM)

At year’s end, a total of 6 of the hedge funds we track were bullish in this stock, a change of -40% from the third quarter. With hedge funds’ positions undergoing their usual ebb and flow, there exists an “upper tier” of notable hedge fund managers who were increasing their holdings substantially.

When looking at the hedgies we track, Ken Griffin’s Citadel Investment Group had the largest position in Pepco Holdings, Inc. (NYSE:POM), worth close to $6.2 million, accounting for less than 0.1%% of its total 13F portfolio. The second largest stake is held by Balyasny Asset Management, managed by Dmitry Balyasny, which held a $5.7 million position; 0.2% of its 13F portfolio is allocated to the stock. Other hedge funds that are bullish include Jacob Gottlieb’s Visium Asset Management, Israel Englander’s Millennium Management and John A. Levin’s Levin Capital Strategies.

Judging by the fact that Pepco Holdings, Inc. (NYSE:POM) has witnessed a declination in interest from the smart money, it’s safe to say that there lies a certain “tier” of hedgies that elected to cut their full holdings at the end of the year. Interestingly, John Fichthorn’s Dialectic Capital Management sold off the biggest stake of all the hedgies we track, valued at about $4.4 million in stock.. Jim Simons’s fund, Renaissance Technologies, also said goodbye to its stock, about $3.5 million worth. These moves are interesting, as aggregate hedge fund interest fell by 4 funds at the end of the year.

Insider trading activity in Pepco Holdings, Inc. (NYSE:POM)

Insider purchases made by high-level executives is best served when the company in focus has seen transactions within the past half-year. Over the last six-month time frame, Pepco Holdings, Inc. (NYSE:POM) has experienced zero unique insiders buying, and 1 insider sales (see the details of insider trades here).

Let’s check out hedge fund and insider activity in other stocks similar to Pepco Holdings, Inc. (NYSE:POM). These stocks are Companhia Paranaense de Energia (ADR) (NYSE:ELP), Alliant Energy Corporation (NYSE:LNT), Brookfield Infrastructure Partners L.P. (NYSE:BIP), Centrais Eletricas Brasileiras SA (ADR) (NYSE:EBR), and ITC Holdings Corp. (NYSE:ITC). This group of stocks belong to the electric utilities industry and their market caps are closest to POM’s market cap.

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