Hedge fund managers like David Einhorn, Bill Ackman, or Carl Icahn became billionaires through reaping large profits for their investors, which is why piggybacking their stock picks may provide us with significant returns as well. Many hedge funds, like Paul Singer’s Elliott Management, are pretty secretive, but we can still get some insights by analyzing their quarterly 13F filings. One of the most fertile grounds for large abnormal returns is hedge funds’ most popular small-cap picks, which are not so widely followed and often trade at a discount to their intrinsic value. In this article we will check out hedge fund activity in another small-cap stock: Alliant Energy Corporation (NASDAQ:LNT).
Is Alliant Energy Corporation (NASDAQ:LNT) an excellent stock to buy now? The smart money is getting more optimistic. The number of bullish hedge fund bets improved by 9 recently. Our calculations also showed that LNT isn’t among the 30 most popular stocks among hedge funds.
Hedge funds’ reputation as shrewd investors has been tarnished in the last decade as their hedged returns couldn’t keep up with the unhedged returns of the market indices. Our research has shown that hedge funds’ large-cap stock picks indeed failed to beat the market between 1999 and 2016. However, we were able to identify in advance a select group of hedge fund holdings that outperformed the market by 40 percentage points since May 2014 through May 30, 2019 (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 25.7% through September 30, 2019. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
Unlike this former hedge fund manager who is convinced Dow will soar past 40000, our long-short investment strategy doesn’t rely on bull markets to deliver double digit returns. We only rely on hedge fund buy/sell signals. We’re going to review the latest hedge fund action encompassing Alliant Energy Corporation (NASDAQ:LNT).
What have hedge funds been doing with Alliant Energy Corporation (NASDAQ:LNT)?
At Q2’s end, a total of 26 of the hedge funds tracked by Insider Monkey were long this stock, a change of 53% from the previous quarter. Below, you can check out the change in hedge fund sentiment towards LNT over the last 16 quarters. With hedge funds’ sentiment swirling, there exists a few noteworthy hedge fund managers who were upping their stakes substantially (or already accumulated large positions).
Among these funds, Citadel Investment Group held the most valuable stake in Alliant Energy Corporation (NYSE:LNT), which was worth $203.8 million at the end of the second quarter. On the second spot was Millennium Management which amassed $107.6 million worth of shares. Moreover, Renaissance Technologies, Zimmer Partners, and Carlson Capital were also bullish on Alliant Energy Corporation (NASDAQ:LNT), allocating a large percentage of their portfolios to this stock.
As industrywide interest jumped, some big names have been driving this bullishness. Shelter Harbor Advisors, managed by Peter J. Hark, assembled the most outsized position in Alliant Energy Corporation (NASDAQ:LNT). Shelter Harbor Advisors had $11 million invested in the company at the end of the quarter. Steve Cohen’s Point72 Asset Management also initiated a $9.3 million position during the quarter. The following funds were also among the new LNT investors: Brian Olson, Baehyun Sung, and Jamie Waters’s Blackstart Capital, John Overdeck and David Siegel’s Two Sigma Advisors, and Jeffrey Talpins’s Element Capital Management.
Let’s now review hedge fund activity in other stocks similar to Alliant Energy Corporation (NASDAQ:LNT). We will take a look at Universal Health Services, Inc. (NYSE:UHS), Masco Corporation (NYSE:MAS), Duke Realty Corporation (NYSE:DRE), and Norwegian Cruise Line Holdings Ltd (NYSE:NCLH). This group of stocks’ market valuations are closest to LNT’s market valuation.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| UHS | 24 | 713982 | -5 |
| MAS | 45 | 1083854 | 5 |
| DRE | 23 | 412696 | 7 |
| NCLH | 35 | 965515 | 0 |
| Average | 31.75 | 794012 | 1.75 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 31.75 hedge funds with bullish positions and the average amount invested in these stocks was $794 million. That figure was $653 million in LNT’s case. Masco Corporation (NYSE:MAS) is the most popular stock in this table. On the other hand Duke Realty Corporation (NYSE:DRE) is the least popular one with only 23 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. Our calculations showed that top 20 most popular stocks (see the video below) among hedge funds returned 24.4% in 2019 through September 30th and outperformed the S&P 500 ETF (SPY) by 4 percentage points. A small number of hedge funds were also right about betting on LNT as the stock returned 10.7% during the same time frame and outperformed the market by an even larger margin.
Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.
Disclosure: None. This article was originally published at Insider Monkey.
