Is Avangrid Inc (NYSE:AGR) a good equity to bet on right now? We like to check what the smart money thinks first before doing extensive research. Although there have been several high profile failed hedge fund picks, the consensus picks among hedge fund investors have historically outperformed the market after adjusting for known risk attributes. It’s not surprising given that hedge funds have access to better information and more resources to find the latest market-moving information.
Avangrid Inc (NYSE:AGR) has seen an increase in support from the world’s most successful money managers in recent months. AGR was in 20 hedge funds’ portfolios at the end of the third quarter of 2016. There were 14 hedge funds in our database with AGR positions 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 KB Financial Group, Inc. (ADR) (NYSE:KB), Citizens Financial Group Inc (NYSE:CFG), and Invesco Ltd. (NYSE:IVZ) to gather more data points.
Follow Avangrid Inc. (NYSE:AGR)
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At Insider Monkey, we’ve developed an investment strategy that has delivered market-beating returns over the past 12 months. Our strategy identifies the 100 best-performing funds of the previous quarter from among the collection of 700+ successful funds that we track in our database, which we accomplish using our returns methodology. We then study the portfolios of those 100 funds using the latest 13F data to uncover the 30 most popular mid-cap stocks (market caps of between $1 billion and $10 billion) among them to hold until the next filing period. This strategy delivered 18% gains over the past 12 months, more than doubling the 8% returns enjoyed by the S&P 500 ETFs.
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Keeping this in mind, let’s take a peek at the key action encompassing Avangrid Inc (NYSE:AGR).
How have hedgies been trading Avangrid Inc (NYSE:AGR)?
Heading into the fourth quarter of 2016, a total of 20 of the hedge funds tracked by Insider Monkey were long this stock, a rise of 43% from one quarter earlier. By comparison, 14 hedge funds held shares or bullish call options in AGR heading into this year. With the smart money’s capital changing hands, there exists an “upper tier” of notable hedge fund managers who were boosting their holdings significantly (or already accumulated large positions).
Of the funds tracked by Insider Monkey, David Einhorn’s Greenlight Capital has the biggest position in Avangrid Inc (NYSE:AGR), worth close to $129.3 million, amounting to 2.5% of its total 13F portfolio. The second most bullish fund manager is Jos Shaver of Electron Capital Partners, with a $39.6 million position; 8.8% of its 13F portfolio is allocated to the stock. Some other members of the smart money with similar optimism consist of Bernard Lambilliotte’s Ecofin Ltd, Dmitry Balyasny’s Balyasny Asset Management and Peter Rathjens, Bruce Clarke and John Campbell’s Arrowstreet Capital. We should note that Electron Capital Partners is among our list of the 100 best performing hedge funds which is based on the performance of their 13F long positions in non-microcap stocks.
Now, key money managers have been driving this bullishness. Adage Capital Management, led by Phill Gross and Robert Atchinson, established the biggest position in Avangrid Inc (NYSE:AGR). Adage Capital Management had $8.4 million invested in the company at the end of the quarter. Glenn Russell Dubin’s Highbridge Capital Management also made a $3.6 million investment in the stock during the quarter. The other funds with brand new AGR positions are Cliff Asness’ AQR Capital Management, Jonathan Barrett and Paul Segal’s Luminus Management, and Israel Englander’s Millennium Management.
Let’s now take a look at hedge fund activity in other stocks similar to Avangrid Inc (NYSE:AGR). We will take a look at KB Financial Group, Inc. (ADR) (NYSE:KB), Citizens Financial Group Inc (NYSE:CFG), Invesco Ltd. (NYSE:IVZ), and Waters Corporation (NYSE:WAT). All of these stocks’ market caps are closest to AGR’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| KB | 9 | 33598 | 3 |
| CFG | 46 | 1113566 | -6 |
| IVZ | 27 | 396617 | -7 |
| WAT | 29 | 631518 | 0 |
As you can see these stocks had an average of 28 hedge funds with bullish positions and the average amount invested in these stocks was $544 million. That figure was $263 million in AGR’s case. Citizens Financial Group Inc (NYSE:CFG) is the most popular stock in this table. On the other hand KB Financial Group, Inc. (ADR) (NYSE:KB) is the least popular one with only 9 bullish hedge fund positions. Avangrid Inc (NYSE:AGR) 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 CFG might be a better candidate to consider taking a long position in.
Disclosure: None
