American Water Works Co., Inc. (NYSE:AWK) was in 25 hedge funds’ portfolio at the end of the first quarter of 2013. AWK has experienced an increase in hedge fund interest lately. There were 24 hedge funds in our database with AWK holdings at the end of the previous quarter.
According to most shareholders, hedge funds are viewed as unimportant, old financial vehicles of years past. While there are more than 8000 funds in operation at present, we look at the crème de la crème of this club, around 450 funds. It is estimated that this group controls most of the hedge fund industry’s total capital, and by paying attention to their top stock picks, we have unsheathed a number of investment strategies that have historically outperformed Mr. Market. Our small-cap hedge fund strategy outstripped the S&P 500 index by 18 percentage points a year 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 outclassed the S&P 500 index by 23.3 percentage points in 8 months (check out a sample of our picks).
Just as integral, optimistic insider trading activity is a second way to parse down the investments you’re interested in. There are lots of motivations for an upper level exec to sell shares of his or her company, but only one, very simple reason why they would buy. Plenty of academic studies have demonstrated the market-beating potential of this tactic if shareholders know where to look (learn more here).
With these “truths” under our belt, we’re going to take a look at the recent action encompassing American Water Works Co., Inc. (NYSE:AWK).
How have hedgies been trading American Water Works Co., Inc. (NYSE:AWK)?
Heading into Q2, a total of 25 of the hedge funds we track held long positions in this stock, a change of 4% from one quarter earlier. With the smart money’s positions undergoing their usual ebb and flow, there exists a select group of key hedge fund managers who were upping their holdings substantially.
Of the funds we track, Osterweis Capital Management, managed by John Osterweis, holds the biggest position in American Water Works Co., Inc. (NYSE:AWK). Osterweis Capital Management has a $93.4 million position in the stock, comprising 3.6% of its 13F portfolio. Sitting at the No. 2 spot is Jim Simons of Renaissance Technologies, with a $33.9 million position; the fund has 0.1% of its 13F portfolio invested in the stock. Remaining hedgies that are bullish include Robert B. Gillam’s McKinley Capital Management, Malcolm Fairbairn’s Ascend Capital and Clint Carlson’s Carlson Capital.
As one would reasonably expect, some big names have been driving this bullishness. Bryn Mawr Capital, managed by Ken Gray and Steve Walsh, established the most valuable position in American Water Works Co., Inc. (NYSE:AWK). Bryn Mawr Capital had 2.4 million invested in the company at the end of the quarter. Neil Chriss’s Hutchin Hill Capital also initiated a $0.4 million position during the quarter. The other funds with brand new AWK positions are Matthew Hulsizer’s PEAK6 Capital Management and John A. Levin’s Levin Capital Strategies.
What do corporate executives and insiders think about American Water Works Co., Inc. (NYSE:AWK)?
Bullish insider trading is best served when the company we’re looking at has experienced transactions within the past 180 days. Over the latest 180-day time frame, American Water Works Co., Inc. (NYSE:AWK) has seen zero unique insiders purchasing, and 9 insider sales (see the details of insider trades here).
Let’s also examine hedge fund and insider activity in other stocks similar to American Water Works Co., Inc. (NYSE:AWK). These stocks are Connecticut Water Service, Inc. (NASDAQ:CTWS), SJW Corp. (NYSE:SJW), California Water Service Group (NYSE:CWT), American States Water Co (NYSE:AWR), and Aqua America Inc (NYSE:WTR). This group of stocks belong to the water utilities industry and their market caps match AWK’s market cap.