The latest 13F reporting period has come and gone, and Insider Monkey have plowed through 823 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 June 30th, when the S&P 500 Index was trading around the 3100 level. Since the end of March, investors decided to bet on the economic recovery and a stock market rebound. S&P 500 Index returned more than 50% since its bottom. In this article you are going to find out whether hedge funds thought Edison International (NYSE:EIX) was a good investment heading into the third quarter and how the stock traded in comparison to the top hedge fund picks.
Is Edison International (NYSE:EIX) going to take off soon? Money managers were turning bullish. The number of bullish hedge fund bets rose by 8 recently. Edison International (NYSE:EIX) was in 37 hedge funds’ portfolios at the end of June. The all time high for this statistics is 34. This means the bullish number of hedge fund positions in this stock currently sits at its all time high. Our calculations also showed that EIX isn’t among the 30 most popular stocks among hedge funds (click for Q2 rankings and see the video for a quick look at the top 5 stocks).
Video: Watch our video about the top 5 most popular hedge fund stocks.
In the financial world there are a large number of tools investors have at their disposal to grade stocks. A pair of the most under-the-radar tools are hedge fund and insider trading indicators. We have shown that, historically, those who follow the top picks of the best fund managers can outperform the broader indices by a solid amount. Insider Monkey’s monthly stock picks returned 101% since March 2017 and outperformed the S&P 500 ETFs by more than 56 percentage points. Our short strategy outperformed the S&P 500 short ETFs by 20 percentage points annually (see the details here). That’s why we believe hedge fund sentiment is a useful indicator that investors should pay attention to.
Joshua Friedman of Canyon Capital Advisors
At Insider Monkey we scour multiple sources to uncover the next great investment idea. For example, Federal Reserve has been creating trillions of dollars electronically to keep the interest rates near zero. We believe this will lead to inflation and boost precious metals prices. So, we are checking out this junior gold mining stock. Legal marijuana is one of the fastest growing industries right now, so we are checking out stock pitches like “the Starbucks of cannabis” to identify the next tenbagger. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. We go through lists like the 10 most profitable companies in the world to pick the best large-cap stocks to buy. 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 latest hedge fund action regarding Edison International (NYSE:EIX).
How have hedgies been trading Edison International (NYSE:EIX)?
Heading into the third quarter of 2020, a total of 37 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 28% from the first quarter of 2020. On the other hand, there were a total of 33 hedge funds with a bullish position in EIX a year ago. So, let’s review which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
When looking at the institutional investors followed by Insider Monkey, Zimmer Partners, managed by Stuart J. Zimmer, holds the most valuable position in Edison International (NYSE:EIX). Zimmer Partners has a $541.7 million position in the stock, comprising 7.3% of its 13F portfolio. Coming in second is Pzena Investment Management, managed by Richard S. Pzena, which holds a $280.4 million position; the fund has 1.8% of its 13F portfolio invested in the stock. Some other members of the smart money that hold long positions consist of Joshua Friedman and Mitchell Julis’s Canyon Capital Advisors, Jeffrey Tannenbaum’s Fir Tree and Phill Gross and Robert Atchinson’s Adage Capital Management. In terms of the portfolio weights assigned to each position Covalis Capital allocated the biggest weight to Edison International (NYSE:EIX), around 30.05% of its 13F portfolio. Inherent Group is also relatively very bullish on the stock, designating 20.12 percent of its 13F equity portfolio to EIX.
As one would reasonably expect, some big names were breaking ground themselves. Fir Tree, managed by Jeffrey Tannenbaum, created the most outsized position in Edison International (NYSE:EIX). Fir Tree had $137.7 million invested in the company at the end of the quarter. Steven Tananbaum’s GoldenTree Asset Management also initiated a $86.1 million position during the quarter. The following funds were also among the new EIX investors: Zilvinas Mecelis’s Covalis Capital, Zach Schreiber’s Point State Capital, and Jos Shaver’s Electron Capital Partners.
Let’s also examine hedge fund activity in other stocks – not necessarily in the same industry as Edison International (NYSE:EIX) but similarly valued. These stocks are Wheaton Precious Metals Corp. (NYSE:WPM), Corning Incorporated (NYSE:GLW), TD Ameritrade Holding Corp. (NASDAQ:AMTD), Deutsche Bank Aktiengesellschaft (NYSE:DB), Nasdaq, Inc. (NASDAQ:NDAQ), Copart, Inc. (NASDAQ:CPRT), and Banco Santander (Brasil) SA (NYSE:BSBR). This group of stocks’ market values match EIX’s market value.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| WPM | 21 | 767509 | -4 |
| GLW | 28 | 147576 | -2 |
| AMTD | 47 | 1172699 | 1 |
| DB | 11 | 1266439 | -1 |
| NDAQ | 25 | 153170 | -1 |
| CPRT | 60 | 826695 | 12 |
| BSBR | 10 | 18916 | 2 |
| Average | 28.9 | 621858 | 1 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 28.9 hedge funds with bullish positions and the average amount invested in these stocks was $622 million. That figure was $1671 million in EIX’s case. Copart, Inc. (NASDAQ:CPRT) is the most popular stock in this table. On the other hand Banco Santander (Brasil) SA (NYSE:BSBR) is the least popular one with only 10 bullish hedge fund positions. Edison International (NYSE:EIX) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for EIX is 67. 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. This is a slightly positive signal but we’d rather spend our time researching stocks that hedge funds are piling on. Our calculations showed that top 10 most popular stocks among hedge funds returned 41.4% in 2019 and outperformed the S&P 500 ETF (SPY) by 10.1 percentage points. These stocks gained 33% in 2020 through the end of August and beat the market by 23.2 percentage points. Unfortunately EIX wasn’t nearly as popular as these 10 stocks and hedge funds that were betting on EIX were disappointed as the stock returned -2.2% during the same time period and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 10 most popular stocks among hedge funds as many of these stocks already outperformed the market so far this year.
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Disclosure: None. This article was originally published at Insider Monkey.
