Hedge Funds Aren’t Crazy About CMS Energy Corporation (CMS) Anymore – Calpine Corporation (CPN), The AES Corporation (AES)

Is CMS Energy Corporation (NYSE:CMS) a buy, sell, or hold? The smart money is in a pessimistic mood. The number of long hedge fund positions were trimmed by 7 recently.

In today’s marketplace, there are a multitude of gauges shareholders can use to watch stocks. A duo of the most underrated are hedge fund and insider trading movement. At Insider Monkey, our studies have shown that, historically, those who follow the best picks of the elite investment managers can outpace the market by a solid amount (see just how much).

Just as integral, bullish insider trading activity is another way to parse down the stock market universe. Just as you’d expect, there are a number of reasons for a corporate insider to downsize shares of his or her company, but just one, very simple reason why they would behave bullishly. Many academic studies have demonstrated the valuable potential of this tactic if you understand where to look (learn more here).

Consequently, let’s take a glance at the key action encompassing CMS Energy Corporation (NYSE:CMS).

How have hedgies been trading CMS Energy Corporation (NYSE:CMS)?

In preparation for this year, a total of 12 of the hedge funds we track were bullish in this stock, a change of -37% from the third quarter. With hedgies’ sentiment swirling, there exists an “upper tier” of noteworthy hedge fund managers who were upping their stakes significantly.

Of the funds we track, Millennium Management, managed by Israel Englander, holds the biggest position in CMS Energy Corporation (NYSE:CMS). Millennium Management has a $51.5 million position in the stock, comprising 0.3% of its 13F portfolio. Coming in second is Phill Gross and Robert Atchinson of Adage Capital Management, with a $49.2 million position; the fund has 0.2% of its 13F portfolio invested in the stock. Some other hedge funds that are bullish include David Harding’s Winton Capital Management, D. E. Shaw’s D E Shaw and Charles Clough’s Clough Capital Partners.

Seeing as CMS Energy Corporation (NYSE:CMS) has faced falling interest from the entirety of the hedge funds we track, it’s safe to say that there lies a certain “tier” of money managers that elected to cut their entire stakes heading into 2013. Interestingly, Jim Simons’s Renaissance Technologies sold off the largest stake of the “upper crust” of funds we monitor, comprising an estimated $7.2 million in stock.. John Fichthorn’s fund, Dialectic Capital Management, also dumped its stock, about $4.4 million worth. These moves are interesting, as total hedge fund interest was cut by 7 funds heading into 2013.

What have insiders been doing with CMS Energy Corporation (NYSE:CMS)?

Bullish insider trading is at its handiest when the company we’re looking at has seen transactions within the past six months. Over the latest 180-day time period, CMS Energy Corporation (NYSE:CMS) has experienced zero unique insiders buying, and 5 insider sales (see the details of insider trades here).

Let’s also take a look at hedge fund and insider activity in other stocks similar to CMS Energy Corporation (NYSE:CMS). These stocks are Calpine Corporation (NYSE:CPN), The AES Corporation (NYSE:AES), Pinnacle West Capital Corporation (NYSE:PNW), SCANA Corporation (NYSE:SCG), and OGE Energy Corp. (NYSE:OGE). All of these stocks are in the electric utilities industry and their market caps resemble CMS’s market cap.