Reputable billionaire investors such as Jim Simons, Cliff Asness and David Tepper generate exorbitant profits for their wealthy accredited investors (a minimum of $1 million in investable assets would be required to invest in a hedge fund and most successful hedge funds won’t accept your savings unless you commit at least $5 million) by pinpointing winning small-cap stocks. There is little or no publicly-available information at all on some of these small companies, which makes it hard for an individual investor to pin down a winner within the small-cap space. However, hedge funds and other big asset managers can do the due diligence and analysis for you instead, thanks to their highly-skilled research teams and vast resources to conduct an appropriate evaluation process. Looking for potential winners within the small-cap galaxy of stocks? We believe following the smart money is a good starting point.
Is PNM Resources, Inc. (NYSE:PNM) an exceptional investment now? The best stock pickers are selling. The number of long hedge fund bets dropped by 1 in recent months. Our calculations also showed that pnm isn’t among the 30 most popular stocks among hedge funds.
In the eyes of most shareholders, hedge funds are seen as slow, outdated investment tools of the past. While there are more than 8000 funds trading at present, We choose to focus on the crème de la crème of this club, approximately 750 funds. These money managers direct most of the hedge fund industry’s total asset base, and by keeping track of their matchless equity investments, Insider Monkey has determined numerous investment strategies that have historically outstripped the market. Insider Monkey’s flagship hedge fund strategy outperformed the S&P 500 index by nearly 5 percentage points per year since its inception in May 2014 through early November 2018. We were able to generate large returns even by identifying short candidates. Our portfolio of short stocks lost 27.5% since February 2017 (through March 12th) even though the market was up nearly 25% during the same period. We just shared a list of 6 short targets in our latest quarterly update and they are already down an average of 6% in less than a month.
Let’s go over the key hedge fund action regarding PNM Resources, Inc. (NYSE:PNM).
What have hedge funds been doing with PNM Resources, Inc. (NYSE:PNM)?
Heading into the first quarter of 2019, a total of 18 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -5% from the second quarter of 2018. The graph below displays the number of hedge funds with bullish position in PNM over the last 14 quarters. So, let’s review which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
According to publicly available hedge fund and institutional investor holdings data compiled by Insider Monkey, Jim Simons’s Renaissance Technologies has the number one position in PNM Resources, Inc. (NYSE:PNM), worth close to $113.9 million, accounting for 0.1% of its total 13F portfolio. The second largest stake is held by GAMCO Investors, led by Mario Gabelli, holding a $86.1 million position; 0.7% of its 13F portfolio is allocated to the stock. Some other professional money managers that hold long positions comprise Israel Englander’s Millennium Management, Cliff Asness’s AQR Capital Management and Ken Griffin’s Citadel Investment Group.
Seeing as PNM Resources, Inc. (NYSE:PNM) has witnessed bearish sentiment from the aggregate hedge fund industry, it’s easy to see that there is a sect of fund managers that slashed their positions entirely in the third quarter. At the top of the heap, David Harding’s Winton Capital Management dropped the largest stake of the 700 funds monitored by Insider Monkey, comprising an estimated $8.2 million in stock. Brandon Haley’s fund, Holocene Advisors, also dumped its stock, about $1 million worth. These bearish behaviors are important to note, as total hedge fund interest dropped by 1 funds in the third quarter.
Let’s go over hedge fund activity in other stocks – not necessarily in the same industry as PNM Resources, Inc. (NYSE:PNM) but similarly valued. These stocks are The Brink’s Company (NYSE:BCO), Allogene Therapeutics, Inc. (NASDAQ:ALLO), Chegg Inc (NYSE:CHGG), and Apple Hospitality REIT Inc (NYSE:APLE). This group of stocks’ market caps are closest to PNM’s market cap.
|Ticker||No of HFs with positions||Total Value of HF Positions (x1000)||Change in HF Position|
View table here if you experience formatting issues.
As you can see these stocks had an average of 16 hedge funds with bullish positions and the average amount invested in these stocks was $273 million. That figure was $323 million in PNM’s case. The Brink’s Company (NYSE:BCO) is the most popular stock in this table. On the other hand Allogene Therapeutics, Inc. (NASDAQ:ALLO) is the least popular one with only 10 bullish hedge fund positions. PNM Resources, Inc. (NYSE:PNM) is not the most popular stock in this group but hedge fund interest is still above average. 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 15 most popular stocks) among hedge funds returned 24.2% through April 22nd and outperformed the S&P 500 ETF (SPY) by more than 7 percentage points. Unfortunately PNM wasn’t nearly as popular as these 15 stock and hedge funds that were betting on PNM were disappointed as the stock returned 9.1% and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 15 most popular stocks) among hedge funds as 13 of these stocks already outperformed the market this year.
Disclosure: None. This article was originally published at Insider Monkey.