At Insider Monkey, we pore over the filings of nearly 817 top investment firms every quarter, a process we have now completed for the latest reporting period. The data we’ve gathered as a result gives us access to a wealth of collective knowledge based on these firms’ portfolio holdings as of September 30. In this article, we will use that wealth of knowledge to determine whether or not The AES Corporation (NYSE:AES) makes for a good investment right now.
Is AES a good stock to buy? Prominent investors were turning bullish. The number of long hedge fund positions improved by 1 lately. The AES Corporation (NYSE:AES) was in 32 hedge funds’ portfolios at the end of September. The all time high for this statistic is 31. This means the bullish number of hedge fund positions in this stock currently sits at its all time high. Our calculations also showed that AES isn’t among the 30 most popular stocks among hedge funds (click for Q3 rankings and see the video for a quick look at the top 5 stocks). There were 31 hedge funds in our database with AES holdings at the end of June.
Video: Watch our video about the top 5 most popular hedge fund stocks.
According to most investors, hedge funds are assumed to be worthless, outdated investment vehicles of yesteryear. While there are more than 8000 funds with their doors open at the moment, We hone in on the crème de la crème of this group, approximately 850 funds. It is estimated that this group of investors oversee bulk of the smart money’s total capital, and by observing their best stock picks, Insider Monkey has come up with numerous investment strategies that have historically defeated Mr. Market. Insider Monkey’s flagship short hedge fund strategy beat the S&P 500 short ETFs by around 20 percentage points per annum since its inception in March 2017. Our portfolio of short stocks lost 13% since February 2017 (through November 17th) even though the market was up 65% during the same period. We just shared a list of 6 short targets in our latest quarterly update .
Ryan Tolkin, CIO of Schonfeld Strategic Advisors
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Do Hedge Funds Think AES Is A Good Stock To Buy Now?
At Q3’s end, a total of 32 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 3% from one quarter earlier. Below, you can check out the change in hedge fund sentiment towards AES over the last 21 quarters. With hedge funds’ sentiment swirling, there exists an “upper tier” of noteworthy hedge fund managers who were increasing their stakes significantly (or already accumulated large positions).
More specifically, Electron Capital Partners was the largest shareholder of The AES Corporation (NYSE:AES), with a stake worth $141.2 million reported as of the end of September. Trailing Electron Capital Partners was Adage Capital Management, which amassed a stake valued at $75.9 million. Millennium Management, Renaissance Technologies, and Millennium Management were also very fond of the stock, becoming one of the largest hedge fund holders of the company. In terms of the portfolio weights assigned to each position Autonomy Capital allocated the biggest weight to The AES Corporation (NYSE:AES), around 12.79% of its 13F portfolio. Electron Capital Partners is also relatively very bullish on the stock, setting aside 9.75 percent of its 13F equity portfolio to AES.
As one would reasonably expect, key hedge funds were breaking ground themselves. Autonomy Capital, managed by Robert Charles Gibbins, assembled the biggest position in The AES Corporation (NYSE:AES). Autonomy Capital had $24 million invested in the company at the end of the quarter. Parvinder Thiara’s Athanor Capital also made a $22.2 million investment in the stock during the quarter. The other funds with brand new AES positions are Zach Schreiber’s Point State Capital, Alexander Mitchell’s Scopus Asset Management, and Ryan Tolkin (CIO)’s Schonfeld Strategic Advisors.
Let’s check out hedge fund activity in other stocks similar to The AES Corporation (NYSE:AES). We will take a look at Fortune Brands Home & Security Inc (NYSE:FBHS), Qiagen NV (NASDAQ:QGEN), Solaredge Technologies Inc (NASDAQ:SEDG), Zendesk Inc (NYSE:ZEN), Arch Capital Group Ltd. (NASDAQ:ACGL), M&T Bank Corporation (NYSE:MTB), and Atmos Energy Corporation (NYSE:ATO). All of these stocks’ market caps resemble AES’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| FBHS | 33 | 298974 | -1 |
| QGEN | 29 | 580443 | -3 |
| SEDG | 31 | 553013 | 6 |
| ZEN | 59 | 1680411 | -4 |
| ACGL | 41 | 1229443 | 5 |
| MTB | 35 | 503738 | 5 |
| ATO | 18 | 110743 | -4 |
| Average | 35.1 | 708109 | 0.6 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 35.1 hedge funds with bullish positions and the average amount invested in these stocks was $708 million. That figure was $579 million in AES’s case. Zendesk Inc (NYSE:ZEN) is the most popular stock in this table. On the other hand Atmos Energy Corporation (NYSE:ATO) is the least popular one with only 18 bullish hedge fund positions. The AES Corporation (NYSE:AES) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for AES is 53.1. Stocks with higher number of hedge fund positions relative to other stocks as well as relative to their historical range receive a higher sentiment score. Our calculations showed that top 20 most popular stocks among hedge funds returned 41.3% in 2019 and outperformed the S&P 500 ETF (SPY) by 10 percentage points. These stocks gained 33.3% in 2020 through December 18th and still beat the market by 16.4 percentage points. A small number of hedge funds were also right about betting on AES as the stock returned 25.4% since the end of the third quarter (through 12/18) and outperformed the market by an even larger margin.
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Disclosure: None. This article was originally published at Insider Monkey.
