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Hedge Funds Have Never Been This Bullish On PNM Resources, Inc. (PNM)

In this article we will take a look at whether hedge funds think PNM Resources, Inc. (NYSE:PNM) is a good investment right now. We check hedge fund and billionaire investor sentiment before delving into hours of research. Hedge funds spend millions of dollars on Ivy League graduates, unconventional data sources, expert networks, and get tips from investment bankers and industry insiders. Sure they sometimes fail miserably, but their consensus stock picks historically outperformed the market after adjusting for known risk factors.

PNM Resources, Inc. (NYSE:PNM) was in 22 hedge funds’ portfolios at the end of the first quarter of 2020. PNM has experienced an increase in activity from the world’s largest hedge funds of late. There were 19 hedge funds in our database with PNM holdings at the end of the previous quarter. Our calculations also showed that PNM isn’t among the 30 most popular stocks among hedge funds (click for Q1 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.

In the 21st century investor’s toolkit there are plenty of metrics stock market investors employ to grade their stock investments. Two of the most useful metrics are hedge fund and insider trading moves. We have shown that, historically, those who follow the best picks of the top hedge fund managers can outclass their index-focused peers by a significant margin (see the details here).

Mario Gabelli of GAMCO Investors

At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, 2020’s unprecedented market conditions provide us with the highest number of trading opportunities in a decade. So we are checking out trades like this one. We interview hedge fund managers and ask them about their best ideas. If you want to find out the best healthcare stock to buy right now, you can watch our latest hedge fund manager interview here. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. Our best call in 2020 was shorting the market when the S&P 500 was trading at 3150 after realizing the coronavirus pandemic’s significance before most investors. Keeping this in mind we’re going to take a look at the new hedge fund action encompassing PNM Resources, Inc. (NYSE:PNM).

How are hedge funds trading PNM Resources, Inc. (NYSE:PNM)?

At Q1’s end, a total of 22 of the hedge funds tracked by Insider Monkey were long this stock, a change of 16% from one quarter earlier. On the other hand, there were a total of 14 hedge funds with a bullish position in PNM a year ago. So, let’s see which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

Among these funds, Renaissance Technologies held the most valuable stake in PNM Resources, Inc. (NYSE:PNM), which was worth $128.4 million at the end of the third quarter. On the second spot was Zimmer Partners which amassed $82.7 million worth of shares. GAMCO Investors, Adage Capital Management, and Citadel Investment Group 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 Blackstart Capital allocated the biggest weight to PNM Resources, Inc. (NYSE:PNM), around 6.4% of its 13F portfolio. Zimmer Partners is also relatively very bullish on the stock, setting aside 1.83 percent of its 13F equity portfolio to PNM.

As industrywide interest jumped, key money managers have jumped into PNM Resources, Inc. (NYSE:PNM) headfirst. Zimmer Partners, managed by Stuart J. Zimmer, established the largest position in PNM Resources, Inc. (NYSE:PNM). Zimmer Partners had $82.7 million invested in the company at the end of the quarter. Brian Olson, Baehyun Sung, and Jamie Waters’s Blackstart Capital also initiated a $3.4 million position during the quarter. The other funds with new positions in the stock are Steve Cohen’s Point72 Asset Management, Noah Levy and Eugene Dozortsev’s Newtyn Management, and Greg Eisner’s Engineers Gate Manager.

Let’s now review hedge fund activity in other stocks – not necessarily in the same industry as PNM Resources, Inc. (NYSE:PNM) but similarly valued. These stocks are TechnipFMC plc (NYSE:FTI), Ashland Global Holdings Inc.. (NYSE:ASH), NorthWestern Corporation (NYSE:NWE), and Cameco Corporation (NYSE:CCJ). This group of stocks’ market caps resemble PNM’s market cap.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
FTI 29 395181 -5
ASH 32 677314 2
NWE 19 125827 0
CCJ 24 267635 -4
Average 26 366489 -1.75

View table here if you experience formatting issues.

As you can see these stocks had an average of 26 hedge funds with bullish positions and the average amount invested in these stocks was $366 million. That figure was $393 million in PNM’s case. Ashland Global Holdings Inc.. (NYSE:ASH) is the most popular stock in this table. On the other hand NorthWestern Corporation (NYSE:NWE) is the least popular one with only 19 bullish hedge fund positions. PNM Resources, Inc. (NYSE:PNM) 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 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 13.9% in 2020 through June 10th and surpassed the market by 14.2 percentage points. Unfortunately PNM wasn’t nearly as popular as these 10 stocks (hedge fund sentiment was quite bearish); PNM investors were disappointed as the stock returned 8% during the second 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 10 most popular stocks among hedge funds as most of these stocks already outperformed the market in 2020.

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