Is FirstEnergy Corp. (NYSE:FE) an excellent investment right now? The best stock pickers are taking a pessimistic view. The number of long hedge fund positions retreated by 6 lately.
To the average investor, there are tons of methods market participants can use to track the equity markets. A couple of the most under-the-radar are hedge fund and insider trading sentiment. At Insider Monkey, our studies have shown that, historically, those who follow the top picks of the top hedge fund managers can outperform their index-focused peers by a very impressive margin (see just how much).
Just as important, optimistic insider trading sentiment is a second way to break down the world of equities. Just as you’d expect, there are many incentives for an insider to drop shares of his or her company, but only one, very simple reason why they would initiate a purchase. Various empirical studies have demonstrated the impressive potential of this method if shareholders know what to do (learn more here).
Consequently, let’s take a glance at the recent action regarding FirstEnergy Corp. (NYSE:FE).
How are hedge funds trading FirstEnergy Corp. (NYSE:FE)?
At the end of the fourth quarter, a total of 14 of the hedge funds we track held long positions in this stock, a change of -30% from the third quarter. With hedgies’ capital changing hands, there exists an “upper tier” of noteworthy hedge fund managers who were boosting their stakes meaningfully.
Of the funds we track, First Eagle Investment Management, managed by Jean-Marie Eveillard, holds the largest position in FirstEnergy Corp. (NYSE:FE). First Eagle Investment Management has a $549 million position in the stock, comprising 2% of its 13F portfolio. On First Eagle Investment Management’s heels is Seminole Capital (Investment Mgmt), managed by Michael Messner, which held a $19 million position; 0% of its 13F portfolio is allocated to the stock. Remaining hedgies that are bullish include David Harding’s Winton Capital Management, Mario Gabelli’s GAMCO Investors and Charles Clough’s Clough Capital Partners.
Since FirstEnergy Corp. (NYSE:FE) has witnessed a declination in interest from the entirety of the hedge funds we track, we can see that there is a sect of fund managers who sold off their entire stakes at the end of the year. Interestingly, Israel Englander’s Millennium Management dropped the largest investment of all the hedgies we watch, comprising about $7 million in stock.. John Fichthorn’s fund, Dialectic Capital Management, also dumped its stock, about $6 million worth. These transactions are interesting, as total hedge fund interest was cut by 6 funds at the end of the year.
How are insiders trading FirstEnergy Corp. (NYSE:FE)?
Insider trading activity, especially when it’s bullish, is at its handiest when the company we’re looking at has seen transactions within the past 180 days. Over the latest half-year time frame, FirstEnergy Corp. (NYSE:FE) has seen zero unique insiders purchasing, and 10 insider sales (see the details of insider trades here).
Let’s also review hedge fund and insider activity in other stocks similar to FirstEnergy Corp. (NYSE:FE). These stocks are Korea Electric Power Corporation (ADR) (NYSE:KEP), Consolidated Edison, Inc. (NYSE:ED), PPL Corporation (NYSE:PPL), Edison International (NYSE:EIX), and PG&E Corporation (NYSE:PCG). This group of stocks belong to the electric utilities industry and their market caps resemble FE’s market cap.
|Company Name||# of Hedge Funds||# of Insiders Buying||# of Insiders Selling|
|Korea Electric Power Corporation (ADR) (NYSE:KEP)||10||0||0|
|Consolidated Edison, Inc. (NYSE:ED)||15||1||0|
|PPL Corporation (NYSE:PPL)||16||0||7|
|Edison International (NYSE:EIX)||18||0||6|
|PG&E Corporation (NYSE:PCG)||14||0||7|
With the results exhibited by Insider Monkey’s research, everyday investors must always pay attention to hedge fund and insider trading sentiment, and FirstEnergy Corp. (NYSE:FE) is no exception.
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