American Water Works Co., Inc. (AWK): Hedge Funds Aren’t Crazy About It, Insider Sentiment Unchanged

At the moment, there are dozens of indicators shareholders can use to analyze stocks. A couple of the best are hedge fund and insider trading movement. At Insider Monkey, our research analyses have shown that, historically, those who follow the best picks of the best investment managers can outpace the market by a significant margin (see just how much).

Just as necessary, bullish insider trading activity is a second way to analyze the investments you’re interested in. There are lots of stimuli for an executive to get rid of shares of his or her company, but just one, very clear reason why they would buy. Several empirical studies have demonstrated the valuable potential of this strategy if shareholders understand what to do (learn more here).

Now that that’s out of the way, we’re going to examine the newest info for American Water Works Co., Inc. (NYSE:AWK).

What does the smart money think about American Water Works Co., Inc. (NYSE:AWK)?

At Q2’s end, a total of 21 of the hedge funds we track were bullish in this stock, a change of -16% from the first quarter. With the smart money’s capital changing hands, there exists an “upper tier” of noteworthy hedge fund managers who were increasing their holdings meaningfully.

According to our 13F database, John Osterweis’s Osterweis Capital Management had the most valuable position in American Water Works Co., Inc. (NYSE:AWK), worth close to $92.7 million, comprising 3.5% of its total 13F portfolio. The second largest stake is held by Impax Asset Management, managed by Ian Simm, which held a $24.4 million position; 2.9% of its 13F portfolio is allocated to the company. Other hedge funds that hold long positions include Malcolm Fairbairn’s Ascend Capital, Robert B. Gillam’s McKinley Capital Management and Glenn Russell Dubin’s Highbridge Capital Management.

As American Water Works Co., Inc. (NYSE:AWK) has faced a fall in interest from the entirety of the hedge funds we track, it’s easy to see that there lies a certain “tier” of money managers that elected to cut their positions entirely in Q1. Intriguingly, Clint Carlson’s Carlson Capital said goodbye to the biggest stake of the “upper crust” of funds we key on, totaling an estimated $18.5 million in stock. Ken Gray and Steve Walsh’s fund, Bryn Mawr Capital, also dumped its stock, about $2.4 million worth. These transactions are interesting, as total hedge fund interest fell by 4 funds in Q1.

What have insiders been doing with American Water Works Co., Inc. (NYSE:AWK)?

Insider buying made by high-level executives is best served when the company we’re looking at has experienced transactions within the past half-year. Over the last half-year time period, American Water Works Co., Inc. (NYSE:AWK) has seen zero unique insiders buying, and zero insider sales (see the details of insider trades here).

We’ll also review the relationship between both of these indicators in other stocks similar to American Water Works Co., Inc. (NYSE:AWK). These stocks are Connecticut Water Service, Inc. (NASDAQ:CTWS), SJW Corp. (NYSE:SJW), California Water Service Group (NYSE:CWT), American States Water Co (NYSE:AWR), and Aqua America Inc (NYSE:WTR). This group of stocks are the members of the water utilities industry and their market caps are closest to AWK’s market cap.

Using the results demonstrated by the previously mentioned studies, regular investors must always pay attention to hedge fund and insider trading activity, and American Water Works Co., Inc. (NYSE:AWK) shareholders fit into this picture quite nicely.

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