Hedge Funds Aren’t Crazy About UIL Holdings Corporation (UIL) Anymore

Is UIL Holdings Corporation (NYSE:UIL) worth your attention right now? Prominent investors are reducing their bets on the stock. The number of long hedge fund bets retreated by 4 lately.

In the eyes of most traders, hedge funds are viewed as underperforming, outdated financial vehicles of the past. While there are over 8000 funds in operation at present, we choose to focus on the crème de la crème of this club, around 450 funds. It is widely believed that this group has its hands on most of all hedge funds’ total asset base, and by keeping an eye on their top stock picks, we have discovered a few investment strategies that have historically beaten the S&P 500 index. Our small-cap hedge fund strategy outpaced the S&P 500 index by 18 percentage points annually for a decade in our back tests, and since we’ve started sharing our picks with our subscribers at the end of August 2012, we have beaten the S&P 500 index by 23.3 percentage points in 8 months (check out a sample of our picks).

Equally as important, positive insider trading sentiment is a second way to parse down the marketplace. As the old adage goes: there are a number of motivations for an executive to cut shares of his or her company, but only one, very clear reason why they would initiate a purchase. Various academic studies have demonstrated the valuable potential of this strategy if investors know what to do (learn more here).

With these “truths” under our belt, it’s important to take a gander at the recent action surrounding UIL Holdings Corporation (NYSE:UIL).

How have hedgies been trading UIL Holdings Corporation (NYSE:UIL)?

Heading into Q2, a total of 5 of the hedge funds we track were long in this stock, a change of -44% from one quarter earlier. With hedge funds’ capital changing hands, there exists an “upper tier” of noteworthy hedge fund managers who were upping their stakes meaningfully.

When looking at the hedgies we track, Millennium Management, managed by Israel Englander, holds the largest position in UIL Holdings Corporation (NYSE:UIL). Millennium Management has a $3.1 million position in the stock, comprising less than 0.1%% of its 13F portfolio. The second largest stake is held by Levin Capital Strategies, managed by John A. Levin, which held a $1.8 million position; less than 0.1%% of its 13F portfolio is allocated to the stock. Some other hedge funds that are bullish include Cliff Asness’s AQR Capital Management, John Zaro’s Bourgeon Capital and Jean-Marie Eveillard’s First Eagle Investment Management.

Due to the fact that UIL Holdings Corporation (NYSE:UIL) has witnessed declining sentiment from hedge fund managers, it’s easy to see that there exists a select few money managers that decided to sell off their full holdings at the end of the first quarter. Interestingly, Thomas M. Fitzgerald’s Longbow Capital Partners dumped the largest stake of the “upper crust” of funds we monitor, comprising close to $1.7 million in stock., and Jim Simons of Renaissance Technologies was right behind this move, as the fund dumped about $1 million worth. These transactions are interesting, as aggregate hedge fund interest dropped by 4 funds at the end of the first quarter.

How are insiders trading UIL Holdings Corporation (NYSE:UIL)?

Bullish insider trading is particularly usable when the company in focus has experienced transactions within the past six months. Over the last six-month time frame, UIL Holdings Corporation (NYSE:UIL) has experienced 1 unique insiders purchasing, and 3 insider sales (see the details of insider trades here).

Let’s go over hedge fund and insider activity in other stocks similar to UIL Holdings Corporation (NYSE:UIL). These stocks are IDACORP Inc (NYSE:IDA), Atlantic Power Corp (NYSE:AT), Portland General Electric Company (NYSE:POR), Black Hills Corp (NYSE:BKH), and UNS Energy Corp (NYSE:UNS). This group of stocks belong to the electric utilities industry and their market caps are similar to UIL’s market cap.

With the returns demonstrated by the aforementioned tactics, everyday investors must always monitor hedge fund and insider trading activity, and UIL Holdings Corporation (NYSE:UIL) is no exception.

Click here to learn why you should track hedge funds