The latest 13F reporting period has come and gone, and Insider Monkey is again at the forefront when it comes to making use of this gold mine of data. We at Insider Monkey have plowed through 823 13F filings that hedge funds and well-known value investors are required to file by the SEC. The 13F filings show the funds’ and investors’ portfolio positions as of June 30th, when the S&P 500 Index was trading around the 3100 level. Stocks kept going up since then. In this article we look at how hedge funds traded Clearway Energy, Inc. (NYSE:CWEN) and determine whether the smart money was really smart about this stock.
Clearway Energy, Inc. (NYSE:CWEN) shareholders have witnessed an increase in hedge fund sentiment recently. Clearway Energy, Inc. (NYSE:CWEN) was in 19 hedge funds’ portfolios at the end of June. The all time high for this statistics is 27. Our calculations also showed that CWEN isn’t among the 30 most popular stocks among hedge funds (click for Q2 rankings and see the video for a quick look at the top 5 stocks).
Video: Watch our video about the top 5 most popular hedge fund stocks.
Why do we pay any attention at all to hedge fund sentiment? Our research has shown that a select group of hedge fund holdings outperformed the S&P 500 ETFs by 56 percentage points since March 2017 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that’ll significantly underperform the market. We have been tracking and sharing the list of these stocks since February 2017 and they lost 34% through August 17th. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
At Insider Monkey we scour multiple sources to uncover the next great investment idea. For example, Federal Reserve has been creating trillions of dollars electronically to keep the interest rates near zero. We believe this will lead to inflation and boost real estate prices. So, we are checking out this junior gold mining stock and we recommended this real estate stock to our monthly premium newsletter subscribers. We go through lists like the 10 most profitable companies in the world to pick the best large-cap stocks to buy. Even though we recommend positions in only a tiny fraction of the companies we analyze, we check out as many stocks as we can. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. You can subscribe to our free daily newsletter on our website to get excerpts of these letters in your inbox. Now let’s analyze the latest hedge fund action surrounding Clearway Energy, Inc. (NYSE:CWEN).
How have hedgies been trading Clearway Energy, Inc. (NYSE:CWEN)?
At second quarter’s end, a total of 19 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 12% from one quarter earlier. The graph below displays the number of hedge funds with bullish position in CWEN over the last 20 quarters. With hedge funds’ sentiment swirling, there exists a select group of key hedge fund managers who were upping their holdings substantially (or already accumulated large positions).
More specifically, Renaissance Technologies was the largest shareholder of Clearway Energy, Inc. (NYSE:CWEN), with a stake worth $80.1 million reported as of the end of September. Trailing Renaissance Technologies was Renaissance Technologies, which amassed a stake valued at $46.6 million. Southpoint Capital Advisors, Electron Capital Partners, and Mountaineer Partners Management were also very fond of the stock, becoming one of the largest hedge fund holders of the company. In terms of the portfolio weights assigned to each position Mountaineer Partners Management allocated the biggest weight to Clearway Energy, Inc. (NYSE:CWEN), around 22.89% of its 13F portfolio. Alta Fundamental Advisers is also relatively very bullish on the stock, earmarking 13.13 percent of its 13F equity portfolio to CWEN.
As aggregate interest increased, key hedge funds have been driving this bullishness. Electron Capital Partners, managed by Jos Shaver, created the biggest position in Clearway Energy, Inc. (NYSE:CWEN). Electron Capital Partners had $19.2 million invested in the company at the end of the quarter. Michael Gelband’s ExodusPoint Capital also initiated a $5.6 million position during the quarter. The other funds with brand new CWEN positions are Bruce Kovner’s Caxton Associates LP, Till Bechtolsheimer’s Arosa Capital Management, and Dmitry Balyasny’s Balyasny Asset Management.
Let’s go over hedge fund activity in other stocks – not necessarily in the same industry as Clearway Energy, Inc. (NYSE:CWEN) but similarly valued. These stocks are US Foods Holding Corp. (NYSE:USFD), Devon Energy Corporation (NYSE:DVN), MAXIMUS, Inc. (NYSE:MMS), Nomad Foods Limited (NYSE:NOMD), Landstar System, Inc. (NASDAQ:LSTR), II-VI, Inc. (NASDAQ:IIVI), and CAE, Inc. (NYSE:CAE). This group of stocks’ market valuations match CWEN’s market valuation.
|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 29.3 hedge funds with bullish positions and the average amount invested in these stocks was $293 million. That figure was $233 million in CWEN’s case. Devon Energy Corporation (NYSE:DVN) is the most popular stock in this table. On the other hand CAE, Inc. (NYSE:CAE) is the least popular one with only 14 bullish hedge fund positions. Clearway Energy, Inc. (NYSE:CWEN) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for CWEN is 36.2. 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. Our calculations showed that top 10 most popular stocks among hedge funds returned 41.4% in 2019 and outperformed the S&P 500 ETF (SPY) by 10.1 percentage points. These stocks gained 24.8% in 2020 through the end of September and still beat the market by 19.3 percentage points. A small number of hedge funds were also right about betting on CWEN as the stock returned 18.4% in the third quarter and outperformed the market by an even larger margin.
Disclosure: None. This article was originally published at Insider Monkey.