Is TECO Energy, Inc. (NYSE:TE) an attractive investment today? The smart money is getting more bullish. The number of bullish hedge fund bets went up by 2 lately.
According to most traders, hedge funds are perceived as slow, old financial vehicles of yesteryear. While there are greater than 8000 funds with their doors open at the moment, we choose to focus on the leaders of this group, around 450 funds. It is widely believed that this group controls the lion’s share of the smart money’s total asset base, and by watching their best investments, we have unsheathed a few investment strategies that have historically outstripped the S&P 500 index. Our small-cap hedge fund strategy outstripped the S&P 500 index by 18 percentage points annually 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 outperformed the S&P 500 index by 24 percentage points in 7 months (see all of our picks from August).
Just as beneficial, bullish insider trading sentiment is a second way to parse down the stock market universe. There are lots of incentives for an upper level exec to cut shares of his or her company, but just one, very simple reason why they would initiate a purchase. Various academic studies have demonstrated the useful potential of this method if piggybackers understand what to do (learn more here).
Keeping this in mind, let’s take a peek at the recent action surrounding TECO Energy, Inc. (NYSE:TE).
Hedge fund activity in TECO Energy, Inc. (NYSE:TE)
At the end of the fourth quarter, a total of 10 of the hedge funds we track held long positions in this stock, a change of 25% from the previous quarter. With the smart money’s positions undergoing their usual ebb and flow, there exists an “upper tier” of key hedge fund managers who were upping their holdings significantly.
Of the funds we track, Dreman Value Management, managed by David Dreman, holds the largest position in TECO Energy, Inc. (NYSE:TE). Dreman Value Management has a $23 million position in the stock, comprising 0.7% of its 13F portfolio. The second largest stake is held by David Harding of Winton Capital Management, with a $14 million position; the fund has 0.4% of its 13F portfolio invested in the stock. Other hedgies that hold long positions include Ken Griffin’s Citadel Investment Group, Israel Englander’s Millennium Management and Mario Gabelli’s GAMCO Investors.
Consequently, specific money managers were breaking ground themselves. Millennium Management, managed by Israel Englander, created the largest position in TECO Energy, Inc. (NYSE:TE). Millennium Management had 4 million invested in the company at the end of the quarter. Joel Greenblatt’s Gotham Asset Management also initiated a $1 million position during the quarter. The other funds with new positions in the stock are Mike Vranos’s Ellington, Paul Tudor Jones’s Tudor Investment Corp, and David Costen Haley’s HBK Investments.
What do corporate executives and insiders think about TECO Energy, Inc. (NYSE:TE)?
Insider trading activity, especially when it’s bullish, is at its handiest when the primary stock in question has seen transactions within the past half-year. Over the latest half-year time frame, TECO Energy, Inc. (NYSE:TE) has experienced zero unique insiders purchasing, and 4 insider sales (see the details of insider trades here).
Let’s also examine hedge fund and insider activity in other stocks similar to TECO Energy, Inc. (NYSE:TE). These stocks are Pepco Holdings, Inc. (NYSE:POM), ITC Holdings Corp. (NYSE:ITC), Centrais Eletricas Brasileiras SA (ADR) (NYSE:EBR), Companhia Paranaense de Energia (ADR) (NYSE:ELP), and Great Plains Energy Incorporated (NYSE:GXP). This group of stocks belong to the electric utilities industry and their market caps are closest to TE’s market cap.