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Hedge Funds Have Never Been This Bullish On Algonquin Power & Utilities Corp. (AQN)

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 752 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 September 30th. In this article we look at what those investors think of Algonquin Power & Utilities Corp. (NYSE:AQN).

Algonquin Power & Utilities Corp. (NYSE:AQN) investors should be aware of an increase in enthusiasm from smart money in recent months. AQN was in 15 hedge funds’ portfolios at the end of September. There were 9 hedge funds in our database with AQN holdings at the end of the previous quarter. Our calculations also showed that AQN isn’t among the 30 most popular stocks among hedge funds (click for Q3 rankings and see the video below for Q2 rankings).
5 Most Popular Stocks Among Hedge Funds
Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.

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Bernard Lambilliotte - Ecofin

Bernard Lambilliotte of Ecofin Ltd

We leave no stone unturned when looking for the next great investment idea. For example Europe is set to become the world’s largest cannabis market, so we check out this European marijuana stock pitch. One of the most bullish analysts in America just put his money where his mouth is. He says, “I’m investing more today than I did back in early 2009.” So we check out his pitch. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. We also rely on the best performing hedge funds‘ buy/sell signals. Let’s analyze the fresh hedge fund action surrounding Algonquin Power & Utilities Corp. (NYSE:AQN).

Hedge fund activity in Algonquin Power & Utilities Corp. (NYSE:AQN)

At Q3’s end, a total of 15 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 67% from one quarter earlier. On the other hand, there were a total of 6 hedge funds with a bullish position in AQN a year ago. With hedge funds’ positions undergoing their usual ebb and flow, there exists a few notable hedge fund managers who were boosting their holdings meaningfully (or already accumulated large positions).

More specifically, GQG Partners was the largest shareholder of Algonquin Power & Utilities Corp. (NYSE:AQN), with a stake worth $126.3 million reported as of the end of September. Trailing GQG Partners was Renaissance Technologies, which amassed a stake valued at $31.6 million. Ecofin Ltd, Arrowstreet Capital, and LMR Partners 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 Ecofin Ltd allocated the biggest weight to Algonquin Power & Utilities Corp. (NYSE:AQN), around 9.18% of its 13F portfolio. Signition LP is also relatively very bullish on the stock, earmarking 1.85 percent of its 13F equity portfolio to AQN.

As one would reasonably expect, key money managers were breaking ground themselves. Arrowstreet Capital, managed by Peter Rathjens, Bruce Clarke and John Campbell, created the most outsized position in Algonquin Power & Utilities Corp. (NYSE:AQN). Arrowstreet Capital had $17.9 million invested in the company at the end of the quarter. Ben Levine, Andrew Manuel and Stefan Renold’s LMR Partners also made a $4 million investment in the stock during the quarter. The other funds with brand new AQN positions are Minhua Zhang’s Weld Capital Management and Stuart J. Zimmer’s Zimmer Partners.

Let’s check out hedge fund activity in other stocks – not necessarily in the same industry as Algonquin Power & Utilities Corp. (NYSE:AQN) but similarly valued. These stocks are Bruker Corporation (NASDAQ:BRKR), MongoDB, Inc. (NASDAQ:MDB), Xerox Holdings Corporation (NYSE:XRX), and EQM Midstream Partners LP (NYSE:EQM). This group of stocks’ market caps match AQN’s market cap.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
BRKR 21 272235 -6
MDB 29 526751 -5
XRX 32 1169230 4
EQM 11 35867 3
Average 23.25 501021 -1

View table here if you experience formatting issues.

As you can see these stocks had an average of 23.25 hedge funds with bullish positions and the average amount invested in these stocks was $501 million. That figure was $211 million in AQN’s case. Xerox Holdings Corporation (NYSE:XRX) is the most popular stock in this table. On the other hand EQM Midstream Partners LP (NYSE:EQM) is the least popular one with only 11 bullish hedge fund positions. Algonquin Power & Utilities Corp. (NYSE:AQN) is not the least popular stock in this group but hedge fund interest is still below average. This is a slightly negative signal and we’d rather spend our time researching stocks that hedge funds are piling on. Our calculations showed that top 20 most popular stocks among hedge funds returned 37.4% in 2019 through the end of November and outperformed the S&P 500 ETF (SPY) by 9.9 percentage points. Unfortunately AQN wasn’t nearly as popular as these 20 stocks (hedge fund sentiment was quite bearish); AQN investors were disappointed as the stock returned 1.9% during the first two months of the fourth quarter and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 20 most popular stocks among hedge funds as 70 percent of these stocks already outperformed the market in Q4.

Disclosure: None. This article was originally published at Insider Monkey.

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