“Value has performed relatively poorly since the 2017 shift, but we believe challenges to the S&P 500’s dominance are mounting and resulting active opportunities away from the index are growing. At some point, this fault line will break, likely on the back of rising rates, and all investors will be reminded that the best time to diversify away from the winners is when it is most painful. The bargain of capturing long-term value may be short-term pain, but enough is eventually enough and it comes time to harvest the benefits.,” said Clearbridge Investments in its market commentary. We aren’t sure whether long-term interest rates will top 5% and value stocks outperform growth, but we follow hedge fund investor letters to understand where the markets and stocks might be going. That’s why we believe it would be worthwhile to take a look at the hedge fund sentiment on Clearway Energy, Inc. (NYSE:CWEN) in order to identify whether reputable and successful top money managers continue to believe in its potential.
Is Clearway Energy, Inc. (NYSE:CWEN) a sound investment right now? The best stock pickers are selling. The number of bullish hedge fund bets were cut by 4 lately. Our calculations also showed that cwen isn’t among the 30 most popular stocks among hedge funds.
In the financial world there are a large number of tools investors have at their disposal to grade stocks. A pair of the most under-the-radar tools are hedge fund and insider trading indicators. We have shown that, historically, those who follow the top picks of the best fund managers can outperform the broader indices by a solid amount. Insider Monkey’s flagship best performing hedge funds strategy returned 20.7% year to date (through March 12th) and outperformed the market even though it draws its stock picks among small-cap stocks. This strategy also outperformed the market by 32 percentage points since its inception (see the details here). That’s why we believe hedge fund sentiment is a useful indicator that investors should pay attention to.
Let’s analyze the latest hedge fund action encompassing Clearway Energy, Inc. (NYSE:CWEN).
What have hedge funds been doing with Clearway Energy, Inc. (NYSE:CWEN)?
At Q4’s end, a total of 12 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -25% from the previous quarter. By comparison, 19 hedge funds held shares or bullish call options in CWEN a year ago. So, let’s check out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
The largest stake in Clearway Energy, Inc. (NYSE:CWEN) was held by Renaissance Technologies, which reported holding $39.3 million worth of stock at the end of September. It was followed by Ardsley Partners with a $7.2 million position. Other investors bullish on the company included Alta Fundamental Advisers, CQS Cayman LP, and Millennium Management.
Seeing as Clearway Energy, Inc. (NYSE:CWEN) has experienced a decline in interest from hedge fund managers, logic holds that there were a few money managers who sold off their full holdings by the end of the third quarter. Interestingly, Dmitry Balyasny’s Balyasny Asset Management sold off the largest investment of all the hedgies watched by Insider Monkey, valued at close to $10.5 million in stock, and Bernard Lambilliotte’s Ecofin Ltd was right behind this move, as the fund sold off about $5.6 million worth. These moves are interesting, as aggregate hedge fund interest was cut by 4 funds by the end of the third quarter.
Let’s check out hedge fund activity in other stocks – not necessarily in the same industry as Clearway Energy, Inc. (NYSE:CWEN) but similarly valued. These stocks are Chimera Investment Corporation (NYSE:CIM), Lions Gate Entertainment Corporation (NYSE:LGF-A), Lions Gate Entertainment Corporation (NYSE:LGF-B), and GrafTech International Ltd. (NYSE:EAF). This group of stocks’ market values are closest to CWEN’s market value.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| CIM | 11 | 29852 | -1 |
| LGF-A | 21 | 339702 | 4 |
| LGF-B | 19 | 299330 | 5 |
| EAF | 23 | 108746 | -8 |
| Average | 18.5 | 194408 | 0 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 18.5 hedge funds with bullish positions and the average amount invested in these stocks was $194 million. That figure was $90 million in CWEN’s case. GrafTech International Ltd. (NYSE:EAF) is the most popular stock in this table. On the other hand Chimera Investment Corporation (NYSE:CIM) is the least popular one with only 11 bullish hedge fund positions. Clearway Energy, Inc. (NYSE:CWEN) is not the least popular stock in this group but hedge fund interest is still below average. This is a slightly negative signal and we’d rather spend our time researching stocks that hedge funds are piling on. Our calculations showed that top 15 most popular stocks) among hedge funds returned 24.2% through April 22nd and outperformed the S&P 500 ETF (SPY) by more than 7 percentage points. Unfortunately CWEN wasn’t nearly as popular as these 15 stock (hedge fund sentiment was quite bearish); CWEN investors were disappointed as the stock returned -7.1% and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 15 most popular stocks) among hedge funds as 13 of these stocks already outperformed the market this year.
Disclosure: None. This article was originally published at Insider Monkey.
