In this article we will check out the progression of hedge fund sentiment towards The AES Corporation (NYSE:AES) and determine whether it is a good investment right now. We at Insider Monkey like to examine what billionaires and hedge funds think of a company before spending days of research on it. Given their 2 and 20 payment structure, hedge funds have more incentives and resources than the average investor. The funds have access to expert networks and get tips from industry insiders. They also employ numerous Ivy League graduates and MBAs. Like everyone else, hedge funds perform miserably at times, but their consensus picks have historically outperformed the market after risk adjustments.
The AES Corporation (NYSE:AES) shareholders have witnessed an increase in hedge fund interest recently. The AES Corporation (NYSE:AES) was in 47 hedge funds’ portfolios at the end of the third quarter of 2021. The all time high for this statistic is 51. Our calculations also showed that AES isn’t among the 30 most popular stocks among hedge funds (click for Q3 rankings).
At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, lithium prices have more than doubled over the past year, so 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. With all of this in mind let’s take a glance at the fresh hedge fund action regarding The AES Corporation (NYSE:AES).
Dan Loeb of Third Point
Do Hedge Funds Think AES Is A Good Stock To Buy Now?
At the end of the third quarter, a total of 47 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 21% from the previous quarter. The graph below displays the number of hedge funds with bullish position in AES over the last 25 quarters. So, let’s see which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
Of the funds tracked by Insider Monkey, Orbis Investment Management, managed by William B. Gray, holds the largest position in The AES Corporation (NYSE:AES). Orbis Investment Management has a $316 million position in the stock, comprising 2.2% of its 13F portfolio. The second largest stake is held by Electron Capital Partners, managed by Jos Shaver, which holds a $226.2 million position; the fund has 12% of its 13F portfolio invested in the stock. Remaining professional money managers that hold long positions comprise John Smith Clark’s Southpoint Capital Advisors, Stuart J. Zimmer’s Zimmer Partners and Dan Loeb’s Third Point. In terms of the portfolio weights assigned to each position Electron Capital Partners allocated the biggest weight to The AES Corporation (NYSE:AES), around 11.96% of its 13F portfolio. SW Investment Management is also relatively very bullish on the stock, designating 6.81 percent of its 13F equity portfolio to AES.
Now, specific money managers have been driving this bullishness. Point72 Asset Management, managed by Steve Cohen, initiated the most outsized position in The AES Corporation (NYSE:AES). Point72 Asset Management had $27.7 million invested in the company at the end of the quarter. Franklin Parlamis’s Aequim Alternative Investments also made a $11.5 million investment in the stock during the quarter. The following funds were also among the new AES investors: Ryan Tolkin (CIO)’s Schonfeld Strategic Advisors, Frank Fu’s CaaS Capital, and Andrew Weiss’s Weiss Asset Management.
Let’s also examine hedge fund activity in other stocks similar to The AES Corporation (NYSE:AES). We will take a look at Incyte Corporation (NASDAQ:INCY), Arch Capital Group Ltd. (NASDAQ:ACGL), Smith & Nephew plc (NYSE:SNN), Avalara, Inc. (NYSE:AVLR), Elanco Animal Health Incorporated (NYSE:ELAN), Check Point Software Technologies Ltd. (NASDAQ:CHKP), and Doximity Inc. (NYSE:DOCS). This group of stocks’ market values match AES’s market value.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| INCY | 37 | 3295444 | 3 |
| ACGL | 31 | 1214570 | 9 |
| SNN | 19 | 106245 | 6 |
| AVLR | 24 | 1070703 | -5 |
| ELAN | 32 | 1850148 | -10 |
| CHKP | 30 | 621231 | 1 |
| DOCS | 19 | 554548 | 19 |
| Average | 27.4 | 1244698 | 3.3 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 27.4 hedge funds with bullish positions and the average amount invested in these stocks was $1245 million. That figure was $1481 million in AES’s case. Incyte Corporation (NASDAQ:INCY) is the most popular stock in this table. On the other hand Smith & Nephew plc (NYSE:SNN) is the least popular one with only 19 bullish hedge fund positions. Compared to these stocks The AES Corporation (NYSE:AES) is more popular among hedge funds. Our overall hedge fund sentiment score for AES is 87.6. 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 28.6% in 2021 through November 30th and still beat the market by 5.6 percentage points. Unfortunately AES wasn’t nearly as popular as these 5 stocks and hedge funds that were betting on AES were disappointed as the stock returned 3% since the end of the third quarter (through 11/30) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 5 most popular stocks among hedge funds as most of these stocks already outperformed the market since 2019.
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Disclosure: None. This article was originally published at Insider Monkey.
