2. The AES Corporation (NYSE:AES)
Number of Hedge Fund Holders: 37
Dividend Yield as of October 28: 2.39%
The AES Corporation (NYSE:AES) is headquartered in Arlington, Virginia, operating as a diversified power generation and utility company. The company also owns and operates utilities to generate, purchase, transmit, and sell electricity to customers in the residential, commercial, industrial, and governmental sectors. On October 7, The AES Corporation (NYSE:AES) declared a quarterly dividend of $0.158 per share, in line with previous. The dividend is payable on November 15, to shareholders of record on November 1. The AES Corporation (NYSE:AES)’s dividend yield on October 28 stood at 2.39%.
On August 18, Morgan Stanley analyst Stephen Byrd raised the price target on The AES Corporation (NYSE:AES) to $32 from $29.50 and kept an Overweight rating on the shares. The analyst lifted growth rates for solar, wind, energy storage, and clean hydrogen, and boosted price targets on many clean tech stocks, given the clean energy support from the new Inflation Reduction Act of 2022.
According to Insider Monkey’s data, 37 hedge funds were bullish on The AES Corporation (NYSE:AES) at the end of June 2022, with collective stakes worth $1.14 billion. William B. Gray’s Orbis Investment Management is the biggest position holder in the company, with 17.6 million shares valued at $369.5 million.
Massif Capital made the following comment about The AES Corporation (NYSE:AES) in its Q3 2022 investor letter:
“Roughly 11% of the portfolio is allocated to U.S. utility The AES Corporation (NYSE:AES) and Canadian independent power producer Polaris Renewable Energy. Both positions have had modest performance this year. Polaris has been more volatile than is justified by the underlying business, putting in an all-time high this year at the beginning of August before tumbling 30.0%. AES has been far more stable and traded in a tighter range but is also down for the year by 5.4%, inclusive of reinvesting the dividends into treasury bills.
AES has continued to build its robust pipeline of energy projects and its strong backlog of signed power purchase agreements (PPAs). Currently, AES has 3.8 GW of renewables with signed PPAs under construction, 6.7 GW of signed PPAs for which building has yet to start, and a total development pipeline of 59 GW as of the start of 2022. Of note is that energy storage projects now make up 18% of that pipeline, with roughly 50% of PPA’s including some storage component.
AES continues to lag some of its peers on a multiple basis, which offers the opportunity for relative and absolute outperformance but raises questions about what the market may be concerned by. Solar supply chain issues are the best explanation for short-term underperformance, but on a two-year basis, AES trades at a roughly 30% discount to peers as measured by P/E and a 27% discount measured on an EV/EBIT basis. Balance sheet concerns may drive the discount, but AES has enjoyed several years of steady credit improvement and notched investment grade ratings across the board in the last 24 months. Still, forward-looking leverage levels remain elevated relative to peers. This may be the wedge keeping a lid on relative performance…” (Click here to read the full text)
