A whopping number of 13F filings filed with U.S. Securities and Exchange Commission has been processed by Insider Monkey so that individual investors can look at the overall hedge fund sentiment towards the stocks included in their watchlists. These freshly-submitted public filings disclose money managers’ equity positions as of the end of the three-month period that ended September 30, so let’s proceed with the discussion of the hedge fund sentiment on Companhia Paranaense de Energia (ADR) (NYSE:ELP).
Companhia Paranaense de Energia (ADR) (NYSE:ELP) shares didn’t see a lot of action during the third quarter. Overall, hedge fund sentiment was unchanged. The stock was in 10 hedge funds’ portfolios at the end of the third quarter of 2016. At the end of this article we will also compare ELP to other stocks including J.C. Penney Company, Inc. (NYSE:JCP), New Jersey Resources Corp (NYSE:NJR), and Seritage Growth Properties (NYSE:SRG) to get a better sense of its popularity.
Follow Companhia Paranaense De Energia (NYSE:ELP)
Follow Companhia Paranaense De Energia (NYSE:ELP)
At Insider Monkey, we’ve developed an investment strategy that has delivered market-beating returns over the past 12 months. Our strategy identifies the 100 best-performing funds of the previous quarter from among the collection of 700+ successful funds that we track in our database, which we accomplish using our returns methodology. We then study the portfolios of those 100 funds using the latest 13F data to uncover the 30 most popular mid-cap stocks (market caps of between $1 billion and $10 billion) among them to hold until the next filing period. This strategy delivered 18% gains over the past 12 months, more than doubling the 8% returns enjoyed by the S&P 500 ETFs.
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Keeping this in mind, let’s take a look at the recent action surrounding Companhia Paranaense de Energia (ADR) (NYSE:ELP).
How have hedgies been trading Companhia Paranaense de Energia (ADR) (NYSE:ELP)?
Heading into the fourth quarter of 2016, a total of 10 of the hedge funds tracked by Insider Monkey held long positions in this stock, unchanged from the previous quarter. On the other hand, there were a total of 4 hedge funds with a bullish position in ELP at the beginning of this year. So, let’s see which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
According to Insider Monkey’s hedge fund database, Peter Rathjens, Bruce Clarke and John Campbell’s Arrowstreet Capital has the number one position in Companhia Paranaense de Energia (ADR) (NYSE:ELP), worth close to $9.9 million. The second largest stake is held by D E Shaw, one of the biggest hedge funds in the world, which oversees a $7.1 million position. Remaining members of the smart money that hold long positions include Jos Shaver’s Electron Capital Partners, Israel Englander’s Millennium Management and Cliff Asness’ AQR Capital Management. We should note that Electron Capital Partners is among our list of the 100 best performing hedge funds which is based on the performance of their 13F long positions in non-microcap stocks.
We view hedge fund activity in the stock unfavorable, but in this case there was only a single hedge fund selling its entire position: Citadel Investment Group. One hedge fund selling its entire position doesn’t always imply a bearish intent. Theoretically a hedge fund may decide to sell a promising position in order to invest the proceeds in a more promising idea. However, we don’t think this is the case in this case because only one of the 800+ hedge funds tracked by Insider Monkey identified as a viable investment and initiated a position in the stock (that fund was Two Sigma Advisors).
Let’s now review hedge fund activity in other stocks – not necessarily in the same industry as Companhia Paranaense de Energia (ADR) (NYSE:ELP) but similarly valued. We will take a look at J.C. Penney Company, Inc. (NYSE:JCP), New Jersey Resources Corp (NYSE:NJR), Seritage Growth Properties (NYSE:SRG), and The Wendy’s Company (NASDAQ:WEN). This group of stocks’ market caps are closest to ELP’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| JCP | 32 | 459927 | 4 |
| NJR | 10 | 88213 | 4 |
| SRG | 21 | 372324 | -1 |
| WEN | 18 | 908931 | -1 |
As you can see these stocks had an average of 20 hedge funds with bullish positions and the average amount invested in these stocks was $457 million. That figure was a modest $24 million in ELP’s case. J.C. Penney Company, Inc. (NYSE:JCP) is the most popular stock in this table. On the other hand New Jersey Resources Corp (NYSE:NJR) is the least popular one with only 10 bullish hedge fund positions. Compared to these stocks Companhia Paranaense de Energia (ADR) (NYSE:ELP) is even less popular than NJR. 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.
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