“The global economic environment is very favorable for investors. Economies are generally strong, but not too strong. Employment levels are among the strongest for many decades. Interest rates are paused at very low levels, and the risk of significant increases in the medium term seems low. Financing for transactions is freely available to good borrowers, but not in major excess. Covenants are lighter than they were five years ago, but the extreme excesses seen in the past do not seem prevalent yet today. Despite this apparent ‘goldilocks’ market environment, we continue to worry about a world where politics are polarized almost everywhere, interest rates are low globally, and equity valuations are at their peak,” are the words of Brookfield Asset Management. Brookfield was right about politics as stocks experienced their second worst May since the 1960s due to escalation of trade disputes. We pay attention to what hedge funds are doing in a particular stock before considering a potential investment because it works for us. So let’s take a glance at the smart money sentiment towards Alliant Energy Corporation (NASDAQ:LNT) and see how it was affected.
Alliant Energy Corporation (NASDAQ:LNT) has experienced a decrease in activity from the world’s largest hedge funds in recent months. Our calculations also showed that LNT isn’t among the 30 most popular stocks among hedge funds (click for Q3 rankings and see the video below for Q2 rankings).
Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.
To most market participants, hedge funds are assumed to be unimportant, old financial tools of years past. While there are over 8000 funds with their doors open today, Our researchers choose to focus on the elite of this group, about 750 funds. These money managers manage bulk of the hedge fund industry’s total asset base, and by following their matchless picks, Insider Monkey has spotted several investment strategies that have historically beaten the S&P 500 index. Insider Monkey’s flagship short hedge fund strategy outstripped the S&P 500 short ETFs by around 20 percentage points annually since its inception in May 2014. Our portfolio of short stocks lost 27.8% since February 2017 (through November 21st) even though the market was up more than 39% during the same period. We just shared a list of 7 short targets in our latest quarterly update .
Stuart Zimmer of Zimmer Partners
Unlike the largest US hedge funds that are convinced Dow will soar past 40,000 or the world’s most bearish hedge fund that’s more convinced than ever that a crash is coming, our long-short investment strategy doesn’t rely on bull or bear markets to deliver double digit returns. We only rely on the best performing hedge funds‘ buy/sell signals. We’re going to review the recent hedge fund action encompassing Alliant Energy Corporation (NASDAQ:LNT).
How have hedgies been trading Alliant Energy Corporation (NASDAQ:LNT)?
At Q3’s end, a total of 21 of the hedge funds tracked by Insider Monkey were long this stock, a change of -19% from the second quarter of 2019. On the other hand, there were a total of 20 hedge funds with a bullish position in LNT a year ago. With hedgies’ capital changing hands, there exists a select group of key hedge fund managers who were upping their holdings considerably (or already accumulated large positions).
The largest stake in Alliant Energy Corporation (NASDAQ:LNT) was held by Citadel Investment Group, which reported holding $220.9 million worth of stock at the end of September. It was followed by Zimmer Partners with a $154.2 million position. Other investors bullish on the company included Millennium Management, Renaissance Technologies, and ExodusPoint Capital. In terms of the portfolio weights assigned to each position Shelter Harbor Advisors allocated the biggest weight to Alliant Energy Corporation (NASDAQ:LNT), around 4.09% of its 13F portfolio. Centenus Global Management is also relatively very bullish on the stock, earmarking 2.59 percent of its 13F equity portfolio to LNT.
Seeing as Alliant Energy Corporation (NASDAQ:LNT) has faced falling interest from the aggregate hedge fund industry, we can see that there is a sect of fund managers that slashed their positions entirely last quarter. It’s worth mentioning that Clint Carlson’s Carlson Capital dumped the biggest investment of the “upper crust” of funds monitored by Insider Monkey, worth an estimated $39.3 million in stock, and Brian Olson, Baehyun Sung, and Jamie Waters’s Blackstart Capital was right behind this move, as the fund sold off about $8.9 million worth. These transactions are interesting, as total hedge fund interest was cut by 5 funds last quarter.
Let’s now take a look at hedge fund activity in other stocks – not necessarily in the same industry as Alliant Energy Corporation (NASDAQ:LNT) but similarly valued. These stocks are Sea Limited (NYSE:SE), Phillips 66 Partners LP (NYSE:PSXP), Coca-Cola FEMSA, S.A.B. de C.V. (NYSE:KOF), and Expeditors International of Washington, Inc. (NASDAQ:EXPD). All of these stocks’ market caps resemble LNT’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| SE | 64 | 3339840 | 4 |
| PSXP | 4 | 9647 | 1 |
| KOF | 12 | 488410 | 3 |
| EXPD | 27 | 361013 | 2 |
| Average | 26.75 | 1049728 | 2.5 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 26.75 hedge funds with bullish positions and the average amount invested in these stocks was $1050 million. That figure was $705 million in LNT’s case. Sea Limited (NYSE:SE) is the most popular stock in this table. On the other hand Phillips 66 Partners LP (NYSE:PSXP) is the least popular one with only 4 bullish hedge fund positions. Alliant Energy Corporation (NASDAQ:LNT) 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 20 most popular stocks among hedge funds returned 37.4% in 2019 through the end of November and outperformed the S&P 500 ETF (SPY) by 9.9 percentage points. Unfortunately LNT wasn’t nearly as popular as these 20 stocks (hedge fund sentiment was quite bearish); LNT investors were disappointed as the stock returned -1.1% during the first two months of the fourth quarter and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 20 most popular stocks among hedge funds as 70 percent of these stocks already outperformed the market in Q4.
Disclosure: None. This article was originally published at Insider Monkey.
