Here is What Hedge Funds Think About Vectren Corporation (VVC)

The government requires hedge funds and wealthy investors with over a certain portfolio size to file a report that shows their positions at the end of every quarter. Even though it isn’t the intention, these filings level the playing field for ordinary investors. The latest round of 13F filings discloses the funds’ positions on September 30. We at Insider Monkey have made an extensive database of more than 700 of those elite funds and prominent investors’ filings. In this article, we analyze how these elite funds and prominent investors traded Vectren Corporation (NYSE:VVC) based on those filings.

Vectren Corporation (NYSE:VVC) investors should pay attention to a decrease in hedge fund sentiment recently. The level and the change in hedge fund popularity aren’t the only variables you need to analyze to decipher hedge funds’ perspectives. A stock may witness a boost in popularity but it may still be less popular than similarly priced stocks. That’s why at the end of this article we will examine companies such as Corrections Corp Of America (NYSE:CXW), MarketAxess Holdings Inc. (NASDAQ:MKTX), and Spirit Airlines Incorporated (NASDAQ:SAVE) to gather more data points.

In the eyes of most investors, hedge funds are seen as worthless, old financial tools of years past. While there are greater than 8,000 funds trading at the moment, Our experts hone in on the masters of this club, approximately 700 funds. Most estimates calculate that this group of people manage most of all hedge funds’ total capital, and by tracking their best picks, Insider Monkey has uncovered various investment strategies that have historically outstripped Mr. Market. Insider Monkey’s small-cap hedge fund strategy outstripped the S&P 500 index by 12 percentage points per year for a decade in their back tests.

With all of this in mind, we’re going to view the latest action encompassing Vectren Corporation (NYSE:VVC).

How have hedgies been trading Vectren Corporation (NYSE:VVC)?

Heading into Q4, a total of 10 of the hedge funds tracked by Insider Monkey were long this stock, a change of -23% from the previous quarter. With hedge funds’ sentiment swirling, there exists a select group of noteworthy hedge fund managers who were boosting their holdings considerably (or already accumulated large positions).

According to Insider Monkey’s hedge fund database, Jim Simons’ Renaissance Technologies has the number one position in Vectren Corporation (NYSE:VVC), worth close to $39.7 million, accounting for 0.1% of its total 13F portfolio. Sitting at the No. 2 spot is AQR Capital Management, led by Cliff Asness, holding an $14.3 million position; less than 0.1% of its 13F portfolio is allocated to the company. Some other peers with similar optimism comprise Dmitry Balyasny’s Balyasny Asset Management,  D E Shaw and Matthew Tewksbury’s Stevens Capital Management.

Since Vectren Corporation (NYSE:VVC) has witnessed a declination in interest from the aggregate hedge fund industry, we can see that there exists a select few hedge funds that slashed their positions entirely last quarter. Interestingly, Glenn Russell Dubin’s Highbridge Capital Management said goodbye to the biggest investment of the “upper crust” of funds followed by Insider Monkey, valued at close to $5.8 million in stock, and John Overdeck and David Siegel’s Two Sigma Advisors was right behind this move, as the fund sold off about $2.6 million worth. These moves are important to note, as total hedge fund interest dropped by 3 funds last quarter.

Let’s also examine hedge fund activity in other stocks – not necessarily in the same industry as Vectren Corporation (NYSE:VVC) but similarly valued. We will take a look at Corrections Corp Of America (NYSE:CXW), MarketAxess Holdings Inc. (NASDAQ:MKTX), Spirit Airlines Incorporated (NASDAQ:SAVE), and Eagle Materials, Inc. (NYSE:EXP). All of these stocks’ market caps are similar to VVC’s market cap.

As you can see these stocks had an average of 26.5 hedge funds with bullish positions and the average amount invested in these stocks was $352 million. That figure was $70 million in VVC’s case. Spirit Airlines Incorporated (NASDAQ:SAVE) is the most popular stock in this table. On the other hand Corrections Corp Of America (NYSE:CXW) is the least popular one with only 15 bullish hedge fund positions. Compared to these stocks Vectren Corporation (NYSE:VVC) is even less popular than CXW. Considering that hedge funds aren’t fond of this stock in relation to other companies analyzed in this article, it may be a good idea to analyze it in detail and understand why the smart money isn’t behind this stock. This isn’t necessarily bad news. Although it is possible that hedge funds may think the stock is overpriced and view the stock as a short candidate, they may not be very familiar with the bullish thesis. In either case more research is warranted.