We at Insider Monkey have gone over 817 13F filings that hedge funds and prominent investors are required to file by the SEC The 13F filings show the funds’ and investors’ portfolio positions as of September 30th. In this article, we look at what those funds think of Centrais Eletricas Brasileiras SA (NYSE:EBR) based on that data.
Is Centrais Eletricas Brasileiras SA (NYSE:EBR) worth your attention right now? Hedge funds were becoming less hopeful. The number of bullish hedge fund bets shrunk by 4 lately. Centrais Eletricas Brasileiras SA (NYSE:EBR) was in 4 hedge funds’ portfolios at the end of the third quarter of 2020. The all time high for this statistics is 8. Our calculations also showed that EBR isn’t among the 30 most popular stocks among hedge funds (click for Q3 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.
Why do we pay any attention at all to hedge fund sentiment? Our research has shown that a select group of hedge fund holdings outperformed the S&P 500 ETFs by 66 percentage points since March 2017 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that’ll significantly underperform the market. We have been tracking and sharing the list of these stocks since February 2017 and they lost 13% through November 17th. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
At Insider Monkey we scour multiple sources to uncover the next great investment idea. For example, Federal Reserve has been creating trillions of dollars electronically to keep the interest rates near zero. We believe this will lead to inflation and boost real estate prices. So, we recommended this real estate stock to our monthly premium newsletter subscribers. We go through lists like the 10 most profitable companies in the world to pick the best large-cap stocks to buy. Even though we recommend positions in only a tiny fraction of the companies we analyze, we check out as many stocks as we can. With all of this in mind let’s analyze the key hedge fund action encompassing Centrais Eletricas Brasileiras SA (NYSE:EBR).
How are hedge funds trading Centrais Eletricas Brasileiras SA (NYSE:EBR.B)?
At Q3’s end, a total of 4 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -50% from one quarter earlier. On the other hand, there were a total of 5 hedge funds with a bullish position in EBR a year ago. With hedge funds’ positions undergoing their usual ebb and flow, there exists a select group of noteworthy hedge fund managers who were adding to their stakes meaningfully (or already accumulated large positions).
According to publicly available hedge fund and institutional investor holdings data compiled by Insider Monkey, AQR Capital Management, managed by Cliff Asness, holds the largest position in Centrais Eletricas Brasileiras SA (NYSE:EBR.B). AQR Capital Management has a $0.5 million position in the stock, comprising less than 0.1%% of its 13F portfolio. Coming in second is Millennium Management, managed by Israel Englander, which holds a $0.4 million position; the fund has less than 0.1%% of its 13F portfolio invested in the stock. Other members of the smart money that are bullish consist of Israel Englander’s Millennium Management, Renaissance Technologies and Donald Sussman’s Paloma Partners. In terms of the portfolio weights assigned to each position Paloma Partners allocated the biggest weight to Centrais Eletricas Brasileiras SA (NYSE:EBR.B), around 0.0042% of its 13F portfolio. AQR Capital Management is also relatively very bullish on the stock, designating 0.0009 percent of its 13F equity portfolio to EBR.
Because Centrais Eletricas Brasileiras SA (NYSE:EBR.B) has experienced declining sentiment from the aggregate hedge fund industry, we can see that there was a specific group of hedgies who sold off their positions entirely last quarter. At the top of the heap, Peter Rathjens, Bruce Clarke and John Campbell’s Arrowstreet Capital cut the largest position of all the hedgies watched by Insider Monkey, comprising about $7.4 million in stock. Ken Griffin’s fund, Citadel Investment Group, also dumped its stock, about $0.3 million worth. These bearish behaviors are interesting, as total hedge fund interest dropped by 4 funds last quarter.
Let’s go over hedge fund activity in other stocks similar to Centrais Eletricas Brasileiras SA (NYSE:EBR.B). We will take a look at CureVac N.V. (NASDAQ:CVAC), Algonquin Power & Utilities Corp. (NYSE:AQN), Vail Resorts, Inc. (NYSE:MTN), Carlyle Group LP (NASDAQ:CG), Lyft, Inc. (NASDAQ:LYFT), Aspen Technology, Inc. (NASDAQ:AZPN), and Coca-Cola FEMSA, S.A.B. de C.V. (NYSE:KOF). This group of stocks’ market caps are closest to EBR’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 18.3 hedge funds with bullish positions and the average amount invested in these stocks was $483 million. That figure was $2 million in EBR’s case. Lyft, Inc. (NASDAQ:LYFT) is the most popular stock in this table. On the other hand Coca-Cola FEMSA, S.A.B. de C.V. (NYSE:KOF) is the least popular one with only 6 bullish hedge fund positions. Compared to these stocks Centrais Eletricas Brasileiras SA (NYSE:EBR.B) is even less popular than KOF. Our overall hedge fund sentiment score for EBR is 16. Stocks with higher number of hedge fund positions relative to other stocks as well as relative to their historical range receive a higher sentiment score. Hedge funds clearly dropped the ball on EBR as the stock delivered strong returns, though hedge funds’ consensus picks still generated respectable returns. Our calculations showed that top 20 most popular stocks among hedge funds returned 41.3% in 2019 and outperformed the S&P 500 ETF (SPY) by 10 percentage points. These stocks gained 30.7% in 2020 through November 27th and still beat the market by 16.1 percentage points. A small number of hedge funds were also right about betting on EBR as the stock returned 10% since Q3 (through November 27th) and outperformed the market by an even larger margin.
Disclosure: None. This article was originally published at Insider Monkey.