Hedge Funds Are Coming Back To WEC Energy Group, Inc. (WEC)

Before we spend countless hours researching a company, we like to analyze what insiders, hedge funds and billionaire investors think of the stock first. This is a necessary first step in our investment process because our research has shown that the elite investors’ consensus returns have been exceptional. In the following paragraphs, we find out what the billionaire investors and hedge funds think of WEC Energy Group, Inc. (NYSE:WEC).

Is WEC Energy Group, Inc. (NYSE:WEC) a buy, sell, or hold? The best stock pickers were becoming hopeful. The number of bullish hedge fund bets moved up by 10 lately. WEC Energy Group, Inc. (NYSE:WEC) was in 27 hedge funds’ portfolios at the end of June. The all time high for this statistic is 30. Our calculations also showed that WEC isn’t among the 30 most popular stocks among hedge funds (click for Q2 rankings).

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 185.4% since March 2017 and outperformed the S&P 500 ETFs by more than 79 percentage points (see the details here). That’s why we believe hedge fund sentiment is a useful indicator that investors should pay attention to.

Stuart Zimmer of Zimmer Partners

At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, lithium mining is one of the fastest growing industries right now, so we are checking out stock pitches like this emerging lithium stock. 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. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. You can subscribe to our free daily newsletter on our homepage. Now we’re going to view the latest hedge fund action regarding WEC Energy Group, Inc. (NYSE:WEC).

Do Hedge Funds Think WEC Is A Good Stock To Buy Now?

At the end of the second quarter, a total of 27 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 59% from the previous quarter. By comparison, 30 hedge funds held shares or bullish call options in WEC a year ago. So, let’s examine which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

The largest stake in WEC Energy Group, Inc. (NYSE:WEC) was held by Millennium Management, which reported holding $155.1 million worth of stock at the end of June. It was followed by Citadel Investment Group with a $97.4 million position. Other investors bullish on the company included D E Shaw, AQR Capital Management, and Renaissance Technologies. In terms of the portfolio weights assigned to each position Coann Capital allocated the biggest weight to WEC Energy Group, Inc. (NYSE:WEC), around 9.6% of its 13F portfolio. Te Ahumairangi Investment Management is also relatively very bullish on the stock, dishing out 0.47 percent of its 13F equity portfolio to WEC.

Now, some big names have been driving this bullishness. Renaissance Technologies, created the most valuable position in WEC Energy Group, Inc. (NYSE:WEC). Renaissance Technologies had $19.3 million invested in the company at the end of the quarter. Matthew Davis’s Coann Capital also made a $12.5 million investment in the stock during the quarter. The other funds with new positions in the stock are Phill Gross and Robert Atchinson’s Adage Capital Management, Stuart J. Zimmer’s Zimmer Partners, and Noam Gottesman’s GLG Partners.

Let’s now take a look at hedge fund activity in other stocks similar to WEC Energy Group, Inc. (NYSE:WEC). These stocks are American Water Works Company, Inc. (NYSE:AWK), Magna International Inc. (NYSE:MGA), Yum China Holdings, Inc. (NYSE:YUMC), Lufax Holding Ltd (NYSE:LU), Garmin Ltd. (NASDAQ:GRMN), Franco-Nevada Corporation (NYSE:FNV), and Delta Air Lines, Inc. (NYSE:DAL). This group of stocks’ market valuations are closest to WEC’s market valuation.

View table here if you experience formatting issues.

As you can see these stocks had an average of 31 hedge funds with bullish positions and the average amount invested in these stocks was $797 million. That figure was $500 million in WEC’s case. Delta Air Lines, Inc. (NYSE:DAL) is the most popular stock in this table. On the other hand Lufax Holding Ltd (NYSE:LU) is the least popular one with only 19 bullish hedge fund positions. WEC Energy Group, Inc. (NYSE:WEC) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for WEC is 50.3. 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 24.9% in 2021 through October 15th and still beat the market by 4.5 percentage points. A small number of hedge funds were also right about betting on WEC as the stock returned 2% since the end of the second quarter (through 10/15) and outperformed the market by an even larger margin.

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Disclosure: None. This article was originally published at Insider Monkey.

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