At Insider Monkey, we pore over the filings of nearly 866 top investment firms every quarter, a process we have now completed for the latest reporting period. The data we’ve gathered as a result gives us access to a wealth of collective knowledge based on these firms’ portfolio holdings as of March 31st. In this article, we will use that wealth of knowledge to determine whether or not Exelon Corporation (NYSE:EXC) makes for a good investment right now.
Exelon Corporation (NYSE:EXC) investors should pay attention to an increase in hedge fund interest recently. Exelon Corporation (NYSE:EXC) was in 44 hedge funds’ portfolios at the end of the first quarter of 2021. The all time high for this statistic was 40. This means the bullish number of hedge fund positions in this stock currently sits at its all time high. Our calculations also showed that EXC isn’t among the 30 most popular stocks among hedge funds (click for Q1 rankings).
Hedge funds’ reputation as shrewd investors has been tarnished in the last decade as their hedged returns couldn’t keep up with the unhedged returns of the market indices. Our research has shown that hedge funds’ small-cap stock picks managed to beat the market by double digits annually between 1999 and 2016, but the margin of outperformance has been declining in recent years. Nevertheless, we were still able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by 115 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 underperformed the market by 10 percentage points annually between 2006 and 2017. Interestingly the margin of underperformance of these stocks has been increasing in recent years. Investors who are long the market and short these stocks would have returned more than 27% annually between 2015 and 2017. We have been tracking and sharing the list of these stocks since February 2017 in our quarterly newsletter.
Stuart Zimmer of Zimmer Partners
At Insider Monkey we leave no stone unturned when looking for 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, which is why we are checking out this inflation play. We go through lists like 10 best gold stocks to buy to identify promising stocks. 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 homepage. Keeping this in mind let’s take a glance at the recent hedge fund action encompassing Exelon Corporation (NYSE:EXC).
Do Hedge Funds Think EXC Is A Good Stock To Buy Now?
At the end of March, a total of 44 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 47% from the previous quarter. By comparison, 33 hedge funds held shares or bullish call options in EXC a year ago. So, let’s find out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
The largest stake in Exelon Corporation (NYSE:EXC) was held by Zimmer Partners, which reported holding $183.1 million worth of stock at the end of December. It was followed by Corvex Capital with a $168.3 million position. Other investors bullish on the company included Citadel Investment Group, Electron Capital Partners, and Two Sigma Advisors. In terms of the portfolio weights assigned to each position Electron Capital Partners allocated the biggest weight to Exelon Corporation (NYSE:EXC), around 9.27% of its 13F portfolio. Corvex Capital is also relatively very bullish on the stock, designating 8.28 percent of its 13F equity portfolio to EXC.
As industrywide interest jumped, key hedge funds have jumped into Exelon Corporation (NYSE:EXC) headfirst. Fir Tree, managed by Jeffrey Tannenbaum, initiated the biggest position in Exelon Corporation (NYSE:EXC). Fir Tree had $52 million invested in the company at the end of the quarter. Michael Gelband’s ExodusPoint Capital also made a $23.4 million investment in the stock during the quarter. The other funds with new positions in the stock are Ryan Tolkin (CIO)’s Schonfeld Strategic Advisors, Zilvinas Mecelis’s Covalis Capital, and Matthew Hulsizer’s PEAK6 Capital Management.
Let’s also examine hedge fund activity in other stocks – not necessarily in the same industry as Exelon Corporation (NYSE:EXC) but similarly valued. We will take a look at TE Connectivity Ltd. (NYSE:TEL), Biogen Inc. (NASDAQ:BIIB), Palantir Technologies Inc. (NYSE:PLTR), EOG Resources Inc (NYSE:EOG), Roper Technologies Inc. (NYSE:ROP), DoorDash, Inc. (NYSE:DASH), and American Electric Power Company, Inc. (NYSE:AEP). This group of stocks’ market caps match EXC’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| TEL | 39 | 2343917 | 0 |
| BIIB | 63 | 2481373 | 0 |
| PLTR | 32 | 1147240 | -6 |
| EOG | 30 | 596119 | -15 |
| ROP | 42 | 1497344 | 2 |
| DASH | 38 | 4774544 | 0 |
| AEP | 32 | 809288 | 0 |
| Average | 39.4 | 1949975 | -2.7 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 39.4 hedge funds with bullish positions and the average amount invested in these stocks was $1950 million. That figure was $1134 million in EXC’s case. Biogen Inc. (NASDAQ:BIIB) is the most popular stock in this table. On the other hand EOG Resources Inc (NYSE:EOG) is the least popular one with only 30 bullish hedge fund positions. Exelon Corporation (NYSE:EXC) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for EXC is 61.2. 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. 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 17.4% in 2021 through June 18th and beat the market again by 6.1 percentage points. Unfortunately EXC wasn’t nearly as popular as these 5 stocks and hedge funds that were betting on EXC were disappointed as the stock returned 2.8% since the end of March (through 6/18) 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.
Follow Exelon Corp (NYSE:EXC)
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Disclosure: None. This article was originally published at Insider Monkey.
