Is Alliant Energy Corporation (NASDAQ:LNT) a good place to invest some of your money right now? We can gain invaluable insight to help us answer that question by studying the investment trends of top investors, who employ world-class Ivy League graduates, who are given immense resources and industry contacts to put their financial expertise to work. The top picks of these firms have historically outperformed the market when we account for known risk factors, making them very valuable investment ideas.
Is LNT a good stock to buy? Hedge funds were buying. The number of long hedge fund bets increased by 7 recently. Alliant Energy Corporation (NASDAQ:LNT) was in 30 hedge funds’ portfolios at the end of the third quarter of 2020. The all time high for this statistic is 30. This means the bullish number of hedge fund positions in this stock currently sits at its all time high. Our calculations also showed that LNT 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). There were 23 hedge funds in our database with LNT positions at the end of the second quarter.
Video: Watch our video about the top 5 most popular hedge fund stocks.
So, why do we pay attention to hedge fund sentiment before making any investment decisions? Our research has shown that hedge funds’ small-cap stock picks managed to beat the market by double digits annually between 1999 and 2016, but the margin of outperformance has been declining in recent years. Nevertheless, we were still able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by more than 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 underperformed the market by 10 percentage points annually between 2006 and 2017. Interestingly the margin of underperformance of these stocks has been increasing in recent years. Investors who are long the market and short these stocks would have returned more than 27% annually between 2015 and 2017. We have been tracking and sharing the list of these stocks since February 2017 in our quarterly newsletter. Even if you aren’t comfortable with shorting stocks, you should at least avoid initiating long positions in stocks that are in our short portfolio.
At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, the House passed a landmark bill decriminalizing marijuana. So, we are checking out this under the radar cannabis stock right now. We go through lists like the 15 best blue chip stocks to buy 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. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. You can subscribe to our free daily newsletter on our website. Keeping this in mind let’s take a look at the recent hedge fund action surrounding Alliant Energy Corporation (NASDAQ:LNT).
Do Hedge Funds Think LNT Is A Good Stock To Buy Now?
At third quarter’s end, a total of 30 of the hedge funds tracked by Insider Monkey were long this stock, a change of 30% from the previous quarter. On the other hand, there were a total of 23 hedge funds with a bullish position in LNT a year ago. With hedgies’ capital changing hands, there exists a select group of notable hedge fund managers who were adding to their holdings substantially (or already accumulated large positions).
When looking at the institutional investors followed by Insider Monkey, Ken Griffin’s Citadel Investment Group has the number one position in Alliant Energy Corporation (NASDAQ:LNT), worth close to $100.9 million, corresponding to less than 0.1%% of its total 13F portfolio. On Citadel Investment Group’s heels is Millennium Management, managed by Israel Englander, which holds a $62.4 million position; the fund has 0.1% of its 13F portfolio invested in the stock. Other professional money managers that hold long positions encompass Cliff Asness’s AQR Capital Management, Renaissance Technologies and D. E. Shaw’s D E Shaw. In terms of the portfolio weights assigned to each position Neo Ivy Capital allocated the biggest weight to Alliant Energy Corporation (NASDAQ:LNT), around 0.37% of its 13F portfolio. Cerebellum Capital is also relatively very bullish on the stock, dishing out 0.29 percent of its 13F equity portfolio to LNT.
As aggregate interest increased, some big names have been driving this bullishness. Balyasny Asset Management, managed by Dmitry Balyasny, established the most outsized position in Alliant Energy Corporation (NASDAQ:LNT). Balyasny Asset Management had $8.3 million invested in the company at the end of the quarter. Paul Marshall and Ian Wace’s Marshall Wace LLP also made a $6.5 million investment in the stock during the quarter. The other funds with brand new LNT positions are Steve Cohen’s Point72 Asset Management, Peter Rathjens, Bruce Clarke and John Campbell’s Arrowstreet Capital, and Paul Tudor Jones’s Tudor Investment Corp.
Let’s check out hedge fund activity in other stocks similar to Alliant Energy Corporation (NASDAQ:LNT). We will take a look at Huazhu Group Limited (NASDAQ:HTHT), Brown & Brown, Inc. (NYSE:BRO), Godaddy Inc (NYSE:GDDY), FactSet Research Systems Inc. (NYSE:FDS), Celanese Corporation (NYSE:CE), Clarivate Plc (NYSE:CCC), and Leidos Holdings Inc (NYSE:LDOS). All of these stocks’ market caps resemble LNT’s market cap.
|Ticker||No of HFs with positions||Total Value of HF Positions (x1000)||Change in HF Position|
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As you can see these stocks had an average of 30.1 hedge funds with bullish positions and the average amount invested in these stocks was $966 million. That figure was $285 million in LNT’s case. Godaddy Inc (NYSE:GDDY) is the most popular stock in this table. On the other hand Huazhu Group Limited (NASDAQ:HTHT) is the least popular one with only 21 bullish hedge fund positions. Alliant Energy Corporation (NASDAQ:LNT) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for LNT is 59.6. 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. This is a slightly negative signal and we’d rather spend our time researching stocks that hedge funds are piling on. 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 33.3% in 2020 through December 18th and surpassed the market again by 16.4 percentage points. Unfortunately LNT wasn’t nearly as popular as these 20 stocks (hedge fund sentiment was quite bearish); LNT investors were disappointed as the stock returned -0.5% since the end of September (through 12/18) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 20 most popular stocks among hedge funds as most of these stocks already outperformed the market in 2020.
Disclosure: None. This article was originally published at Insider Monkey.