Centrais Eletricas Brasileiras SA (ADR) (NYSE:EBR) was in 7 hedge funds’ portfolio at the end of December. EBR investors should pay attention to a decrease in support from the world’s most elite money managers recently. There were 8 hedge funds in our database with EBR holdings at the end of the previous quarter.
To most stock holders, hedge funds are seen as unimportant, old investment tools of years past. While there are more than 8000 funds trading at present, we choose to focus on the top tier of this group, around 450 funds. Most estimates calculate that this group has its hands on most of the smart money’s total capital, and by paying attention to their top picks, we have formulated a number of investment strategies that have historically outstripped Mr. Market. Our small-cap hedge fund strategy outperformed the S&P 500 index by 18 percentage points per annum for a decade in our back tests, and since we’ve started 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 the details here).
Just as integral, bullish insider trading activity is another way to break down the world of equities. Obviously, there are many reasons for an insider to downsize shares of his or her company, but just one, very obvious reason why they would behave bullishly. Several empirical studies have demonstrated the impressive potential of this strategy if piggybackers understand what to do (learn more here).
With these “truths” under our belt, it’s important to take a look at the latest action regarding Centrais Eletricas Brasileiras SA (ADR) (NYSE:EBR).
How are hedge funds trading Centrais Eletricas Brasileiras SA (ADR) (NYSE:EBR.B)?
Heading into 2013, a total of 7 of the hedge funds we track were bullish in this stock, a change of -13% from the third quarter. With hedge funds’ capital changing hands, there exists an “upper tier” of key hedge fund managers who were upping their holdings meaningfully.
When looking at the hedgies we track, Vinik Asset Management, managed by Jeffrey Vinik, holds the largest position in Centrais Eletricas Brasileiras SA (ADR) (NYSE:EBR.B). Vinik Asset Management has a $15.3 million position in the stock, comprising 0.4% of its 13F portfolio. Coming in second is Renaissance Technologies, managed by Jim Simons, which held a $2.7 million position; the fund has less than 0.1%% of its 13F portfolio invested in the stock. Other hedge funds that hold long positions include Israel Englander’s Millennium Management, David Costen Haley’s HBK Investments and Ken Griffin’s Citadel Investment Group.
Seeing as Centrais Eletricas Brasileiras SA (ADR) (NYSE:EBR.B) has faced a declination in interest from hedge fund managers, we can see that there exists a select few hedgies that decided to sell off their entire stakes last quarter. Intriguingly, Peter Rathjens, Bruce Clarke and John Campbell’s Arrowstreet Capital dumped the largest position of the 450+ funds we watch, comprising about $5.1 million in stock., and Steven Cohen of SAC Capital Advisors was right behind this move, as the fund cut about $0.2 million worth. These moves are interesting, as total hedge fund interest was cut by 1 funds last quarter.
How are insiders trading Centrais Eletricas Brasileiras SA (ADR) (NYSE:EBR.B)?
Insider purchases made by high-level executives is particularly usable when the company in question has seen transactions within the past 180 days. Over the latest half-year time frame, Centrais Eletricas Brasileiras SA (ADR) (NYSE:EBR.B) has seen zero unique insiders purchasing, and zero insider sales (see the details of insider trades here).
Let’s also review hedge fund and insider activity in other stocks similar to Centrais Eletricas Brasileiras SA (ADR) (NYSE:EBR.B). These stocks are TECO Energy, Inc. (NYSE:TE), Brookfield Infrastructure Partners L.P. (NYSE:BIP), Companhia Paranaense de Energia (ADR) (NYSE:ELP), Pepco Holdings, Inc. (NYSE:POM), and ITC Holdings Corp. (NYSE:ITC). All of these stocks are in the electric utilities industry and their market caps resemble EBR’s market cap.
| Company Name | # of Hedge Funds | # of Insiders Buying | # of Insiders Selling |
| TECO Energy, Inc. (NYSE:TE) | 10 | 0 | 4 |
| Brookfield Infrastructure Partners L.P. (NYSE:BIP) | 6 | 0 | 0 |
| Companhia Paranaense de Energia (ADR) (NYSE:ELP) | 6 | 0 | 0 |
| Pepco Holdings, Inc. (NYSE:POM) | 6 | 0 | 1 |
| ITC Holdings Corp. (NYSE:ITC) | 12 | 0 | 4 |
With the results shown by our strategies, retail investors must always pay attention to hedge fund and insider trading activity, and Centrais Eletricas Brasileiras SA (ADR) (NYSE:EBR.B) applies perfectly to this mantra.
