Westar Energy Inc (NYSE:WR) investors should pay attention to a decrease in enthusiasm from smart money in recent months.
In the eyes of most traders, hedge funds are perceived as worthless, outdated financial tools of the past. While there are more than 8000 funds in operation at the moment, we choose to focus on the crème de la crème of this club, close to 450 funds. Most estimates calculate that this group controls the majority of the hedge fund industry’s total capital, and by monitoring their top equity investments, we have found a few investment strategies that have historically beaten the broader indices. 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 beaten the S&P 500 index by 24 percentage points in 7 months (see all of our picks from August).
Just as key, optimistic insider trading activity is a second way to break down the investments you’re interested in. As the old adage goes: there are lots of stimuli for a bullish insider to get rid of shares of his or her company, but just one, very clear reason why they would buy. Plenty of academic studies have demonstrated the valuable potential of this strategy if piggybackers know where to look (learn more here).
Now, it’s important to take a peek at the latest action encompassing Westar Energy Inc (NYSE:WR).
How have hedgies been trading Westar Energy Inc (NYSE:WR)?
Heading into 2013, a total of 7 of the hedge funds we track were bullish in this stock, a change of -22% from the previous quarter. With hedge funds’ sentiment swirling, there exists an “upper tier” of key hedge fund managers who were increasing their holdings meaningfully.
When looking at the hedgies we track, Mario Gabelli’s GAMCO Investors had the most valuable position in Westar Energy Inc (NYSE:WR), worth close to $40.3 million, comprising 0.3% of its total 13F portfolio. The second largest stake is held by Jim Simons of Renaissance Technologies, with a $39.2 million position; 0.1% of its 13F portfolio is allocated to the company. Remaining hedgies with similar optimism include Israel Englander’s Millennium Management, Ken Gray and Steve Walsh’s Bryn Mawr Capital and David Costen Haley’s HBK Investments.
Seeing as Westar Energy Inc (NYSE:WR) has experienced declining sentiment from hedge fund managers, it’s easy to see that there lies a certain “tier” of hedgies who sold off their full holdings in Q4. It’s worth mentioning that John Fichthorn’s Dialectic Capital Management sold off the biggest investment of the 450+ funds we watch, worth an estimated $6.6 million in stock.. Tim Flannery’s fund, Copia Capital, also sold off its stock, about $2.9 million worth. These bearish behaviors are important to note, as total hedge fund interest was cut by 2 funds in Q4.
How have insiders been trading Westar Energy Inc (NYSE:WR)?
Insider trading activity, especially when it’s bullish, is most useful when the company we’re looking at has seen transactions within the past 180 days. Over the latest six-month time frame, Westar Energy Inc (NYSE:WR) has experienced zero unique insiders purchasing, and 5 insider sales (see the details of insider trades here).
Let’s also review hedge fund and insider activity in other stocks similar to Westar Energy Inc (NYSE:WR). These stocks are Ameren Corp (NYSE:AEE), Vectren Corporation (NYSE:VVC), NV Energy, Inc. (NYSE:NVE), TransAlta Corporation (USA) (NYSE:TAC), and UGI Corp (NYSE:UGI). This group of stocks belong to the diversified utilities industry and their market caps match WR’s market cap.
|Company Name||# of Hedge Funds||# of Insiders Buying||# of Insiders Selling|
|Ameren Corp (NYSE:AEE)||21||0||0|
|Vectren Corporation (NYSE:VVC)||9||0||0|
|NV Energy, Inc. (NYSE:NVE)||13||0||4|
|TransAlta Corporation (USA) (NYSE:TAC)||3||0||0|
|UGI Corp (NYSE:UGI)||12||3||4|
With the results demonstrated by the aforementioned time-tested strategies, retail investors should always watch hedge fund and insider trading activity, and Westar Energy Inc (NYSE:WR) is an important part of this process.