At Insider Monkey we track the activity of some of the best-performing hedge funds like Appaloosa Management, Baupost, and Third Point because we determined that some of the stocks that they are collectively bullish on can help us generate returns above the broader indices. Out of thousands of stocks that hedge funds invest in, small-caps can provide the best returns over the long term due to the fact that these companies are less efficiently priced and are usually under the radars of mass-media, analysts and dumb money. This is why we follow the smart money moves in the small-cap space.
Talen Energy Corp (NYSE:TLN) was in 20 hedge funds’ portfolios at the end of the third quarter of 2015. TLN has experienced an increase in support from the world’s most elite money managers in recent months. There were 19 hedge funds in our database with TLN holdings at the end of the previous quarter. 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 Premier Inc (NASDAQ:PINC), Apollo Investment Corp. (NASDAQ:AINV), and Axovant Sciences Ltd (NYSE:AXON) to gather more data points.
Follow Talen Energy Corp (TSE:TLN)
Follow Talen Energy Corp (TSE:TLN)
To the average investor, there are numerous tools investors put to use to assess publicly traded companies. A duo of the most innovative tools are hedge fund and insider trading moves. We have shown that, historically, those who follow the top picks of the elite money managers can outperform the market by a very impressive amount (see the details here).
Keeping this in mind, we’re going to go over the key action regarding Talen Energy Corp (NYSE:TLN).
What does the smart money think about Talen Energy Corp (NYSE:TLN)?
Heading into Q4, a total of 20 of the hedge funds tracked by Insider Monkey were long this stock, inching up by 5% from the second quarter. With hedgies’ sentiment swirling, there exists a few notable 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, Silver Point Capital, managed by Edward A. Mule, holds the number one position in Talen Energy Corp (NYSE:TLN). According to its latest 13F filing, the fund has a $27.5 million position in the stock, comprising 3.5% of its 13F portfolio. The second largest stake is held by D E Shaw, led by D. E. Shaw, holding a $19 million position; the fund has less than 0.1% of its 13F portfolio invested in the stock. Remaining members of the smart money that are bullish include Cliff Asness’s AQR Capital Management, Stuart J. Zimmer’s Zimmer Partners and Israel Englander’s Millennium Management.
Consequently, key hedge funds were leading the bulls’ herd. Renaissance Technologies, managed by Jim Simons, created the largest position in Talen Energy Corp (NYSE:TLN), valued at $2.7 million at the end of the quarter. David Costen Haley’s HBK Investments also made a $1.4 million investment in the stock during the quarter. The other funds with new positions in the stock are Peter Muller’s PDT Partners, Michael Platt and William Reeves’s BlueCrest Capital Mgmt., and Ben Levine, Andrew Manuel and Stefan Renold’s LMR Partners.
Let’s also examine hedge fund activity in other stocks similar to Talen Energy Corp (NYSE:TLN). These stocks are Premier Inc (NASDAQ:PINC), Apollo Investment Corp. (NASDAQ:AINV), Axovant Sciences Ltd (NYSE:AXON), and Plexus Corp. (NASDAQ:PLXS). All of these stocks’ market caps resemble TLN’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| PINC | 17 | 194452 | 0 |
| AINV | 17 | 23528 | 1 |
| AXON | 15 | 1148980 | -6 |
| PLXS | 15 | 108007 | 0 |
As you can see these stocks had an average of 16 hedge funds with bullish positions and the average amount invested in these stocks was $369 million. That figure was an unimpressive $89 million in TLN’s case. Premier Inc (NASDAQ:PINC) and Apollo Investment Corp. (NASDAQ:AINV) are fighting for the first place, while Axovant Sciences Ltd (NYSE:AXON) and Plexus Corp. (NASDAQ:PLXS) sit at the bottom of the table with only 15 bullish hedge fund positions. Compared to these stocks Talen Energy Corp (NYSE:TLN) is more popular among hedge funds. Considering that hedge funds are fond of this stock in relation to its market cap peers, it may be a good idea to analyze it in detail and potentially include it in your portfolio.