The latest 13F reporting period has come and gone, and Insider Monkey is again at the forefront when it comes to making use of this gold mine of data. We at Insider Monkey have plowed through 867 13F filings that hedge funds and well-known value investors are required to file by the SEC. The 13F filings show the funds’ and investors’ portfolio positions as of September 30th. Hedge funds’ consensus stock picks performed spectacularly over the last 3 years, but 2022 hasn’t been kind to hedge funds. In this article we look at how hedge funds traded American Electric Power Company, Inc. (NYSE:AEP) and determine whether the smart money was really smart about this stock.
Is American Electric Power Company, Inc. (NYSE:AEP) the right investment to pursue these days? Prominent investors were buying. The number of bullish hedge fund positions improved by 7 in recent months. American Electric Power Company, Inc. (NYSE:AEP) was in 36 hedge funds’ portfolios at the end of the third quarter of 2021. The all time high for this statistic is 38. Our calculations also showed that AEP isn’t among the 30 most popular stocks among hedge funds (click for Q3 rankings). There were 29 hedge funds in our database with AEP holdings at the end of June.
Stuart Zimmer of Zimmer Partners
At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, lithium prices have more than doubled over the past year, so we go through lists like the 10 best EV stocks to pick the next Tesla that will deliver a 10x return. Even though we recommend positions in only a tiny fraction of the companies we analyze, we check out as many stocks as we can. With all of this in mind let’s take a look at the new hedge fund action regarding American Electric Power Company, Inc. (NYSE:AEP).
Do Hedge Funds Think AEP Is A Good Stock To Buy Now?
Heading into the fourth quarter of 2021, a total of 36 of the hedge funds tracked by Insider Monkey were long this stock, a change of 24% from one quarter earlier. Below, you can check out the change in hedge fund sentiment towards AEP over the last 25 quarters. With hedge funds’ positions undergoing their usual ebb and flow, there exists a select group of key hedge fund managers who were boosting their holdings considerably (or already accumulated large positions).
More specifically, Renaissance Technologies was the largest shareholder of American Electric Power Company, Inc. (NYSE:AEP), with a stake worth $189.8 million reported as of the end of September. Trailing Renaissance Technologies was Zimmer Partners, which amassed a stake valued at $101.6 million. Millennium Management, ExodusPoint Capital, and Adage Capital Management were also very fond of the stock, becoming one of the largest hedge fund holders of the company. In terms of the portfolio weights assigned to each position Horseman Capital Management allocated the biggest weight to American Electric Power Company, Inc. (NYSE:AEP), around 2.75% of its 13F portfolio. Zimmer Partners is also relatively very bullish on the stock, designating 1.6 percent of its 13F equity portfolio to AEP.
With a general bullishness amongst the heavyweights, some big names were breaking ground themselves. TwinBeech Capital, managed by Jinghua Yan, initiated the biggest position in American Electric Power Company, Inc. (NYSE:AEP). TwinBeech Capital had $16.7 million invested in the company at the end of the quarter. Paul Tudor Jones’s Tudor Investment Corp also made a $4.3 million investment in the stock during the quarter. The other funds with new positions in the stock are John Horseman’s Horseman Capital Management, John M. Angelo and Michael L. Gordon’s Angelo Gordon & Co, and Sander Gerber’s Hudson Bay Capital Management.
Let’s go over hedge fund activity in other stocks – not necessarily in the same industry as American Electric Power Company, Inc. (NYSE:AEP) but similarly valued. These stocks are Prudential Financial Inc (NYSE:PRU), Koninklijke Philips NV (NYSE:PHG), Paychex, Inc. (NASDAQ:PAYX), Electronic Arts Inc. (NASDAQ:EA), Constellation Brands, Inc. (NYSE:STZ), Sempra Energy (NYSE:SRE), and Aptiv PLC (NYSE:APTV). This group of stocks’ market valuations resemble AEP’s market valuation.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| PRU | 33 | 460021 | 5 |
| PHG | 11 | 79466 | 1 |
| PAYX | 34 | 1115089 | 5 |
| EA | 53 | 1097032 | -3 |
| STZ | 53 | 1719109 | 3 |
| SRE | 23 | 287269 | -5 |
| APTV | 44 | 1757047 | 4 |
| Average | 35.9 | 930719 | 1.4 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 35.9 hedge funds with bullish positions and the average amount invested in these stocks was $931 million. That figure was $752 million in AEP’s case. Electronic Arts Inc. (NASDAQ:EA) is the most popular stock in this table. On the other hand Koninklijke Philips NV (NYSE:PHG) is the least popular one with only 11 bullish hedge fund positions. American Electric Power Company, Inc. (NYSE:AEP) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for AEP is 68.2. Stocks with higher number of hedge fund positions relative to other stocks as well as relative to their historical range receive a higher sentiment score. Our calculations showed that top 5 most popular stocks among hedge funds returned 95.8% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 40 percentage points. These stocks gained 29.6% in 2021 and still beat the market by 3.6 percentage points. Hedge funds were also right about betting on AEP as the stock returned 12.4% since the end of Q3 (through 1/31) and outperformed the market. Hedge funds were rewarded for their relative bullishness.
Follow American Electric Power Co Inc (NYSE:AEP)
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Disclosure: None. This article was originally published at Insider Monkey.
