Millennium Management is a privately-owned hedge fund established by Israel Englander in 1989. The investment management firm employs a global multi-strategy investment approach by engaging in a multitude of trading and investing strategies. Englander’s fund is one of the most famous in the world, and is well-known for its unique model which represents a mix of strong risk oversight and over 150 detached trading teams. As stated by its most recent 13F filing with the SEC, Millennium Management oversees a public equity portfolio worth $52.87 billion. In the following article we’ll briefly discuss some of Izzy’s recent bets on the utilities sector. After thoroughly analyzing the most recent 13F filing, we identified three interesting moves made by Englander in relation to these companies in that sector: American Electric Power Co. Inc. (NYSE:AEP), PPL Corporation (NYSE:PPL), and Ameren Corporation (NYSE:AEE).
We don’t just track the latest moves of hedge funds. We are, in fact, more interested in their 13F filings, which we use to determine the top 15 small-cap stocks held by the funds we track. We gather and share this information based on 16 years of research which showed that these 15 most popular small-cap picks have a great potential to outperform the market, beating the S&P 500 Total Return Index by nearly one percentage point per month in backtests, and easily beating the most popular large-cap picks of funds, which nonetheless get the majority of their collective capital. Why pay fees to invest in both the best and worst ideas of a particular hedge fund when you can simply mimic only the very best ideas of the best fund managers on your own? Since the beginning of forward testing in August 2012, the Insider Monkey small-cap strategy has outperformed the market every year, returning 118%, nearly two times greater returns than the S&P 500 during the same period (see more details).
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Millennium Management reduced its stake in American Electric Power Co. Inc. (NYSE:AEP) by 789,217 shares during the second quarter, reporting ownership of 6.74 million shares as of June 30. Just recently, President Barack Obama and the Environmental Protection Agency announced the final version of the Clean Power Plan, which will surely have a major impact on American Electric Power in the future. AEP is one of the largest electric utilities in the U.S., so the company will be pressed to reduce carbon dioxide emissions by 2030. However, the Obama administration introduced the first draft of the plan last year, and it’s highly likely that the potential results or consequences of the Clean Power Plan have more or less been priced in already. Let’s not forget to mention that the shares of AEP have lost slightly over 5% since the beginning of the year. Glenn Russell Dubin’s Highbridge Capital Management acquired a 905,786 share-stake in American Electric Power Co. Inc. (NYSE:AEP) during the second quarter.
Let’s move on to PPL Corporation (NYSE:PPL), which is another utility company that delivers electricity and natural gas in the United States, as well as the United Kingdom. Millennium Management disclosed a stake of 10.89 million shares of the company in its latest 13F filing, marking an increase of 9.81 million shares from the prior quarter. The company recently revealed that almost 200,000 power outages were prevented during the first half of the year. PPL Corporation has been installing smart grid technology and using stronger poles and wires in order to achieve this success. PPL has been able to keep its delivery system reliable, but there is more potential for improvement the company says. PPL Corporation, which is already among the best utilities in the U.S. in terms of customer service and reliability, is planning to improve its reliability by at least 20% over the next five years. However, the shares of PPL haven’t generated any gains for its long-term investors this year, declining by slightly over 9% year-to-date. John Smith Clark’s Southpoint Capital Advisors is among the top shareholders of PPL Corporation (NYSE:PPL), owning 4.3 million shares.
Millennium Management added 133,720 shares to its position Ameren Corporation (NYSE:AEE), ending the quarter with 7.00 million shares valued at $263.81 million. The company’s recent financial performance has shown visible improvement, thanks to its increased investments in electric transmission and delivery infrastructure. Nevertheless, Ameren generates almost 76% of its electricity from coal-fired facilities, which are one of the biggest sources of carbon 8=emissions. Considering the recently revealed Clean Power Plan, as mentioned above, which states that carbon pollution has to be reduced by at least 28% by 2015 and 32% by 2030, from 2005 levels, Ameren will have to invest massively in order to achieve these milestones. In the meantime, the company has also failed to deliver good performance this year, with its shares dropping by nearly 8% year-to-date. Jonathan Barrett and Paul Segal’s Luminus Management is the second-largest equity holder of Ameren Corporation (NYSE:AEE) among the hedge funds we track, tailing only Millennium Management.
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