At Insider Monkey, we pore over the filings of more than 700 top investment firms every quarter, a process we have now completed for the latest reporting period. The data we’ve gathered as a result gives us access to a wealth of collective knowledge based on these firms’ portfolio holdings as of September 30. In this article, we will use that wealth of knowledge to determine whether or not Exelon Corporation (NYSE:EXC) makes for a good investment right now.
Exelon Corporation (NYSE:EXC) shareholders have witnessed an increase in enthusiasm from smart money lately. The level and the change in hedge fund popularity aren’t the only variables you need to analyze to decipher hedge funds’ perspectives. A stock may witness a boost in popularity, but it may still be less popular than similarly priced stocks. That’s why at the end of this article, we will examine companies such as Vertex Pharmaceuticals Incorporated (NASDAQ:VRTX), Illumina, Inc. (NASDAQ:ILMN), and Archer Daniels Midland Company (NYSE:ADM) to gather more data points.
Follow Exelon Corp (NYSE:EXC)
Follow Exelon Corp (NYSE:EXC)
If you’d ask most market participants, hedge funds are seen as slow, old investment tools of yesteryear. While there are greater than 8000 funds with their doors open today, our experts choose to focus on the elite of this group, approximately 700 funds. These investment experts direct bulk of the smart money’s total asset base, and by following their matchless stock picks, Insider Monkey has formulated several investment strategies that have historically outrun Mr. Market. Insider Monkey’s small-cap hedge fund strategy outpaced the S&P 500 index by 12 percentage points per year for a decade in their back tests.
Keeping this in mind, let’s take a gander at the recent action regarding Exelon Corporation (NYSE:EXC).
Hedge fund activity in Exelon Corporation (NYSE:EXC)
At the end of the third quarter, a total of 40 of the hedge funds tracked by Insider Monkey were long this stock, an increase of 33% from the second quarter. With the smart money’s sentiment swirling, there exists an “upper tier” of noteworthy hedge fund managers who were upping their stakes substantially (or already accumulated large positions).
According to publicly available hedge fund and institutional investor holdings data compiled by Insider Monkey, Clint Carlson’s Carlson Capital has the largest position in Exelon Corporation (NYSE:EXC), worth close to $200.6 million, corresponding to 2.3% of its total 13F portfolio. The second most bullish fund manager is Millennium Management, led by Israel Englander, holding a $198.9 million position; 0.4% of its 13F portfolio is allocated to the stock. Some other hedge funds and institutional investors that hold long positions include Glenn Russell Dubin’s Highbridge Capital Management, Jonathan Barrett and Paul Segal’s Luminus Management, and D E Shaw.
As one would reasonably expect, key hedge funds have been driving this bullishness. Marshall Wace LLP, managed by Paul Marshall and Ian Wace, assembled the largest position in Exelon Corporation (NYSE:EXC). Marshall Wace LLP had $32.3 million invested in the company at the end of the quarter. Carl Tiedemann and Michael Tiedemann’s TIG Advisors also initiated a $22.8 million position during the quarter. The other funds with brand new EXC positions are Peter Muller’s PDT Partners, Peter Rathjens, Bruce Clarke and John Campbell’s Arrowstreet Capital, and John Overdeck and David Siegel’s Two Sigma Advisors.
Let’s now take a look at hedge fund activity in other stocks – not necessarily in the same industry as Exelon Corporation (NYSE:EXC) but similarly valued. We will take a look at Vertex Pharmaceuticals Incorporated (NASDAQ:VRTX), Illumina, Inc. (NASDAQ:ILMN), Archer Daniels Midland Company (NYSE:ADM), and Cardinal Health, Inc. (NYSE:CAH). This group of stocks’ market caps resembles Exelon Corporation (NYSE:EXC)’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| VRTX | 51 | 1412232 | 6 |
| ILMN | 62 | 2252670 | -2 |
| ADM | 33 | 825665 | 0 |
| CAH | 42 | 795529 | -3 |
As you can see, these stocks had an average of 47 hedge funds with bullish positions and the average amount invested in these stocks was $1.32 billion. That figure was $955 million in Exelon Corporation (NYSE:EXC)’s case. Illumina, Inc. (NASDAQ:ILMN) is the most popular stock in this table. On the other hand, Archer Daniels Midland Company (NYSE:ADM) is the least popular one with only 33 bullish hedge fund positions. Exelon Corporation (NYSE:EXC) is not the least popular stock in this group, but hedge fund interest is still below average. This is a slightly negative signal and we’d rather spend our time researching stocks that hedge funds are piling on. In this regard, Illumina, Inc. (NASDAQ:ILMN) might be a better candidate to consider a long position.
