Hedge Funds Are Crazy About FirstEnergy Corp. (FE)

FirstEnergy Corp. (NYSE:FE) was in 16 hedge funds’ portfolio at the end of the first quarter of 2013. FE has experienced an increase in hedge fund sentiment lately. There were 15 hedge funds in our database with FE positions at the end of the previous quarter.

In the financial world, there are dozens of metrics shareholders can use to watch the equity markets. A couple of the most underrated are hedge fund and insider trading interest. At Insider Monkey, our studies have shown that, historically, those who follow the best picks of the best money managers can outperform their index-focused peers by a solid amount (see just how much).

Just as beneficial, bullish insider trading activity is another way to break down the financial markets. As the old adage goes: there are plenty of stimuli for a bullish insider to get rid of shares of his or her company, but only one, very simple reason why they would initiate a purchase. Many academic studies have demonstrated the impressive potential of this strategy if you know where to look (learn more here).

With these “truths” under our belt, let’s take a look at the key action surrounding FirstEnergy Corp. (NYSE:FE).

What does the smart money think about FirstEnergy Corp. (NYSE:FE)?

Heading into Q2, a total of 16 of the hedge funds we track were long in this stock, a change of 7% from one quarter earlier. With hedge funds’ positions undergoing their usual ebb and flow, there exists a few key hedge fund managers who were increasing their holdings meaningfully.

When looking at the hedgies we track, First Eagle Investment Management, managed by Jean-Marie Eveillard, holds the most valuable position in FirstEnergy Corp. (NYSE:FE). First Eagle Investment Management has a $563.2 million position in the stock, comprising 1.9% of its 13F portfolio. Sitting at the No. 2 spot is Carlson Capital, managed by Clint Carlson, which held a $48.3 million position; 0.7% of its 13F portfolio is allocated to the company. Other hedge funds with similar optimism include Ken Griffin’s Citadel Investment Group, Jim Simons’s Renaissance Technologies and David Harding’s Winton Capital Management.

As aggregate interest increased, some big names were breaking ground themselves. Carlson Capital, managed by Clint Carlson, initiated the most outsized position in FirstEnergy Corp. (NYSE:FE). Carlson Capital had 48.3 million invested in the company at the end of the quarter. Jim Simons’s Renaissance Technologies also initiated a $12.9 million position during the quarter. The following funds were also among the new FE investors: Israel Englander’s Millennium Management, Peter Rathjens, Bruce Clarke and John Campbell’s Arrowstreet Capital, and John Overdeck and David Siegel’s Two Sigma Advisors.

How have insiders been trading FirstEnergy Corp. (NYSE:FE)?

Insider purchases made by high-level executives is particularly usable when the company in question has seen transactions within the past 180 days. Over the last six-month time period, FirstEnergy Corp. (NYSE:FE) has seen zero unique insiders purchasing, and 10 insider sales (see the details of insider trades here).

Let’s go over hedge fund and insider activity in other stocks similar to FirstEnergy Corp. (NYSE:FE). These stocks are PG&E Corporation (NYSE:PCG), Edison International (NYSE:EIX), PPL Corporation (NYSE:PPL), Consolidated Edison, Inc. (NYSE:ED), and Korea Electric Power Corporation (ADR) (NYSE:KEP). This group of stocks are in the electric utilities industry and their market caps resemble FE’s market cap.

With the results demonstrated by Insider Monkey’s strategies, retail investors should always pay attention to hedge fund and insider trading sentiment, and FirstEnergy Corp. (NYSE:FE) is an important part of this process.

Click here to learn why you should track hedge funds