Hedge Funds Are Buying Entergy Corporation (ETR)

Should Entergy Corporation (NYSE:ETR) investors track the following data?

Now, according to many investors, hedge funds are assumed to be bloated, old financial vehicles of a period lost to current times. Although there are more than 8,000 hedge funds in operation today, this site looks at the elite of this group, close to 525 funds. It is assumed that this group has its hands on most of the smart money’s total capital, and by monitoring their highest performing investments, we’ve figured out a number of investment strategies that have historically outperformed Mr. Market. Our small-cap hedge fund strategy outpaced the S&P 500 index by 18 percentage points per year 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 trumped the S&P 500 index by 33 percentage points in 11 months (find the details here).

Equally as useful, positive insider trading sentiment is another way to look at the investments you’re interested in. There are many incentives for an upper level exec to downsize shares of his or her company, but only one, very obvious reason why they would behave bullishly. Many empirical studies have demonstrated the impressive potential of this method if investors understand what to do (learn more here).

Now that that’s out of the way, let’s analyze the latest info about Entergy Corporation (NYSE:ETR).

Hedge fund activity in Entergy Corporation (NYSE:ETR)

In preparation for the third quarter, a total of 18 of the hedge funds we track were long in this stock, a change of 20% from the first quarter. With hedge funds’ sentiment swirling, there exists a select group of key hedge fund managers who were increasing their holdings meaningfully.

When using filings from the hedgies we track, Pzena Investment Management, managed by Richard S. Pzena, holds the largest position in Entergy Corporation (NYSE:ETR). Pzena Investment Management has a $280.6 million position in the stock, comprising 1.9% of its 13F portfolio. On Pzena Investment Management’s heels is Matt McLennan of First Eagle Investment Management, with a $259.6 million position; the fund has 0.8% of its 13F portfolio invested in the stock. Other hedgies that hold long positions include Israel Englander’s Millennium Management, Ken Griffin’s Citadel Investment Group and Cliff Asness’s AQR Capital Management.

As aggregate interest spiked, particular hedge funds were leading the bulls’ herd. Pzena Investment Management, managed by Richard S. Pzena, initiated the most outsized position in Entergy Corporation (NYSE:ETR). Pzena Investment Management had 280.6 million invested in the company at the end of the quarter. Matt McLennan’s First Eagle Investment Management also initiated a $259.6 million position during the quarter. The other funds with brand new ETR positions are Israel Englander’s Millennium Management, Ken Griffin’s Citadel Investment Group, and Cliff Asness’s AQR Capital Management.

How have insiders been trading Entergy Corporation (NYSE:ETR)?

Bullish insider trading is most useful when the company in focus has seen transactions within the past six months. Over the last half-year time period, Entergy Corporation (NYSE:ETR) has seen zero unique insiders buying, and zero insider sales (see the details of insider trades here).

We’ll also review the relationship between both of these indicators in other stocks similar to Entergy Corporation (NYSE:ETR). These stocks are The AES Corporation (NYSE:AES), Calpine Corporation (NYSE:CPN), Wisconsin Energy Corporation (NYSE:WEC), Companhia Energetica Minas Gerais (ADR) (NYSE:CIG), and DTE Energy Co (NYSE:DTE). All of these stocks are in the electric utilities industry and their market caps are similar to ETR’s market cap.

Using the returns explained by our analyses, average investors should always keep one eye on hedge fund and insider trading sentiment, and Entergy Corporation (NYSE:ETR) is no exception.

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