Is Black Hills Corp (NYSE:BKH) a buy here? Money managers are in a pessimistic mood. The number of long hedge fund bets were cut by 2 lately.
If you’d ask most stock holders, hedge funds are viewed as unimportant, old investment tools of the past. While there are greater than 8000 funds with their doors open today, we hone in on the upper echelon of this club, around 450 funds. It is widely believed that this group oversees the lion’s share of the smart money’s total capital, and by monitoring their top picks, we have revealed a few investment strategies that have historically outpaced the broader indices. Our small-cap hedge fund strategy outperformed the S&P 500 index by 18 percentage points a year for a decade in our back tests, and since we’ve started sharing our picks with our subscribers at the end of August 2012, we have outpaced the S&P 500 index by 24 percentage points in 7 months (see the details here).
Equally as beneficial, optimistic insider trading sentiment is another way to break down the investments you’re interested in. Obviously, there are a variety of stimuli for a corporate insider to get rid of shares of his or her company, but just one, very simple reason why they would buy. Several academic studies have demonstrated the market-beating potential of this strategy if piggybackers know where to look (learn more here).
Consequently, let’s take a glance at the latest action regarding Black Hills Corp (NYSE:BKH).
How are hedge funds trading Black Hills Corp (NYSE:BKH)?
At the end of the fourth quarter, a total of 7 of the hedge funds we track were bullish in this stock, a change of -22% from the previous quarter. With hedge funds’ sentiment swirling, there exists a few notable hedge fund managers who were increasing their holdings meaningfully.
Of the funds we track, Mario Gabelli’s GAMCO Investors had the largest position in Black Hills Corp (NYSE:BKH), worth close to $24.3 million, accounting for 0.2% of its total 13F portfolio. The second largest stake is held by Gregg J. Powers of Private Capital Management, with a $15.2 million position; 1.5% of its 13F portfolio is allocated to the company. Other hedgies that hold long positions include Israel Englander’s Millennium Management, Jim Simons’s Renaissance Technologies and Cliff Asness’s AQR Capital Management.
Due to the fact that Black Hills Corp (NYSE:BKH) has faced bearish sentiment from hedge fund managers, it’s easy to see that there lies a certain “tier” of fund managers that slashed their positions entirely heading into 2013. At the top of the heap, John A. Levin’s Levin Capital Strategies cut the largest position of the 450+ funds we watch, totaling about $0.8 million in stock., and John Overdeck and David Siegel of Two Sigma Advisors was right behind this move, as the fund cut about $0.3 million worth. These moves are intriguing to say the least, as total hedge fund interest dropped by 2 funds heading into 2013.
How are insiders trading Black Hills Corp (NYSE:BKH)?
Insider purchases made by high-level executives is particularly usable when the primary stock in question has experienced transactions within the past six months. Over the last 180-day time period, Black Hills Corp (NYSE:BKH) has experienced zero unique insiders buying, and zero insider sales (see the details of insider trades here).
Let’s check out hedge fund and insider activity in other stocks similar to Black Hills Corp (NYSE:BKH). These stocks are IDACORP Inc (NYSE:IDA), Portland General Electric Company (NYSE:POR), Atlantic Power Corp (NYSE:AT), UNS Energy Corp (NYSE:UNS), and UIL Holdings Corporation (NYSE:UIL). This group of stocks are the members of the electric utilities industry and their market caps are similar to BKH’s market cap.
|Company Name||# of Hedge Funds||# of Insiders Buying||# of Insiders Selling|
|IDACORP Inc (NYSE:IDA)||8||0||7|
|Portland General Electric Company (NYSE:POR)||12||0||1|
|Atlantic Power Corp (NYSE:AT)||2||3||0|
|UNS Energy Corp (NYSE:UNS)||7||0||4|
|UIL Holdings Corporation (NYSE:UIL)||8||2||2|
With the results demonstrated by the aforementioned studies, everyday investors should always keep an eye on hedge fund and insider trading sentiment, and Black Hills Corp (NYSE:BKH) applies perfectly to this mantra.