Insider Monkey has processed numerous 13F filings of hedge funds and successful value investors to create an extensive database of hedge fund holdings. The 13F filings show the hedge funds’ and successful investors’ positions as of the end of the first quarter. You can find articles about an individual hedge fund’s trades on numerous financial news websites. However, in this article we will take a look at their collective moves over the last 4.5 years and analyze what the smart money thinks of The AES Corporation (NYSE:AES) based on that data.
Is The AES Corporation (NYSE:AES) the right pick for your portfolio? Investors who are in the know are betting on the stock. The number of long hedge fund positions moved up by 4 recently. Our calculations also showed that AES isn’t among the 30 most popular stocks among hedge funds (click for Q1 rankings and see the video for a quick look at the top 5 stocks). AES was in 31 hedge funds’ portfolios at the end of the first quarter of 2020. There were 27 hedge funds in our database with AES positions at the end of the previous quarter.
Video: Watch our video about the top 5 most popular hedge fund stocks.
Why do we pay any attention at all to hedge fund sentiment? Our research has shown that a select group of hedge fund holdings outperformed the S&P 500 ETFs by 51 percentage points since March 2017 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that’ll significantly underperform the market. We have been tracking and sharing the list of these stocks since February 2017 and they lost 36% through May 18th. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
Jeffrey Ubben of ValueAct Capital
At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, 2020’s unprecedented market conditions provide us with the highest number of trading opportunities in a decade. So we are checking out trades like this one. We interview hedge fund managers and ask them about their best ideas. If you want to find out the best healthcare stock to buy right now, you can watch our latest hedge fund manager interview here. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. Our best call in 2020 was shorting the market when the S&P 500 was trading at 3150 after realizing the coronavirus pandemic’s significance before most investors. With all of this in mind let’s view the latest hedge fund action encompassing The AES Corporation (NYSE:AES).
What does smart money think about The AES Corporation (NYSE:AES)?
Heading into the second quarter of 2020, a total of 31 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 15% from the previous quarter. On the other hand, there were a total of 24 hedge funds with a bullish position in AES a year ago. So, let’s review which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
According to publicly available hedge fund and institutional investor holdings data compiled by Insider Monkey,Renaissance Technologies has the largest position in The AES Corporation (NYSE:AES), worth close to $188.7 million, corresponding to 0.2% of its total 13F portfolio. Coming in second is Jeffrey Ubben of ValueAct Capital, with a $59.1 million position; 0.8% of its 13F portfolio is allocated to the stock. Other professional money managers that hold long positions contain Ken Griffin’s Citadel Investment Group, Jos Shaver’s Electron Capital Partners and John Overdeck and David Siegel’s Two Sigma Advisors. In terms of the portfolio weights assigned to each position Electron Capital Partners allocated the biggest weight to The AES Corporation (NYSE:AES), around 10.59% of its 13F portfolio. Blackstart Capital is also relatively very bullish on the stock, dishing out 6.22 percent of its 13F equity portfolio to AES.
As one would reasonably expect, key hedge funds were breaking ground themselves. Arrowstreet Capital, managed by Peter Rathjens, Bruce Clarke and John Campbell, initiated the largest position in The AES Corporation (NYSE:AES). Arrowstreet Capital had $17 million invested in the company at the end of the quarter. Till Bechtolsheimer’s Arosa Capital Management also made a $4.8 million investment in the stock during the quarter. The following funds were also among the new AES investors: Michael Gelband’s ExodusPoint Capital, Dmitry Balyasny’s Balyasny Asset Management, and Sara Nainzadeh’s Centenus Global Management.
Let’s also examine hedge fund activity in other stocks similar to The AES Corporation (NYSE:AES). We will take a look at Teradyne, Inc. (NYSE:TER), ONEOK, Inc. (NYSE:OKE), Medical Properties Trust, Inc. (NYSE:MPW), and Fair Isaac Corporation (NYSE:FICO). This group of stocks’ market valuations resemble AES’s market valuation.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| TER | 28 | 842457 | -5 |
| OKE | 25 | 135073 | -6 |
| MPW | 16 | 164781 | 2 |
| FICO | 41 | 1225484 | -4 |
| Average | 27.5 | 591949 | -3.25 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 27.5 hedge funds with bullish positions and the average amount invested in these stocks was $592 million. That figure was $446 million in AES’s case. Fair Isaac Corporation (NYSE:FICO) is the most popular stock in this table. On the other hand Medical Properties Trust, Inc. (NYSE:MPW) is the least popular one with only 16 bullish hedge fund positions. The AES Corporation (NYSE:AES) is not the most popular stock in this group but hedge fund interest is still above average. This is a slightly positive signal but we’d rather spend our time researching stocks that hedge funds are piling on. Our calculations showed that top 10 most popular stocks among hedge funds returned 41.4% in 2019 and outperformed the S&P 500 ETF (SPY) by 10.1 percentage points. These stocks gained 8.3% in 2020 through the end of May but beat the market by 13.2 percentage points. Unfortunately AES wasn’t nearly as popular as these 10 stocks and hedge funds that were betting on AES were disappointed as the stock returned -7.2% during the same time period and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 10 most popular stocks among hedge funds as many of these stocks already outperformed the market so far this year.
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Disclosure: None. This article was originally published at Insider Monkey.
