The Insider Monkey team has completed processing the quarterly 13F filings for the September quarter submitted by the hedge funds and other money managers included in our extensive database. Most hedge fund investors experienced strong gains on the back of a strong market performance, which certainly propelled them to adjust their equity holdings so as to maintain the desired risk profile. As a result, the relevancy of these public filings and their content is indisputable, as they may reveal numerous high-potential stocks. The following article will discuss the smart money sentiment towards Companhia Paranaense de Energia – COPEL (NYSE:ELP).
Companhia Paranaense de Energia – COPEL (NYSE:ELP) investors should pay attention to a decrease in hedge fund interest in recent months. Our calculations also showed that ELP 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.
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 Russell 2000 ETFs by 40 percentage points since May 2014 (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 27.8% through November 21, 2019. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
Noam Gottesman of GLG Partners
We leave no stone unturned when looking for the next great investment idea. For example Europe is set to become the world’s largest cannabis market, so we check out this European marijuana stock pitch. One of the most bullish analysts in America just put his money where his mouth is. He says, “I’m investing more today than I did back in early 2009.” So we check out his pitch. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. We also rely on the best performing hedge funds‘ buy/sell signals. We’re going to review the key hedge fund action regarding Companhia Paranaense de Energia – COPEL (NYSE:ELP).
How are hedge funds trading Companhia Paranaense de Energia – COPEL (NYSE:ELP)?
At Q3’s end, a total of 8 of the hedge funds tracked by Insider Monkey were long this stock, a change of -11% from one quarter earlier. On the other hand, there were a total of 8 hedge funds with a bullish position in ELP a year ago. With hedge funds’ capital changing hands, there exists a few noteworthy hedge fund managers who were boosting their stakes meaningfully (or already accumulated large positions).
Among these funds, D E Shaw held the most valuable stake in Companhia Paranaense de Energia – COPEL (NYSE:ELP), which was worth $20.7 million at the end of the third quarter. On the second spot was Arrowstreet Capital which amassed $19.8 million worth of shares. Renaissance Technologies, GLG Partners, 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 Arrowstreet Capital allocated the biggest weight to Companhia Paranaense de Energia – COPEL (NYSE:ELP), around 0.05% of its 13F portfolio. Ellington is also relatively very bullish on the stock, designating 0.03 percent of its 13F equity portfolio to ELP.
We view hedge fund activity in the stock unfavorable, but in this case there was only a single hedge fund selling its entire position: Marshall Wace. 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 none of the 750+ hedge funds tracked by Insider Monkey identified ELP as a viable investment and initiated a position in the stock.
Let’s go over hedge fund activity in other stocks similar to Companhia Paranaense de Energia – COPEL (NYSE:ELP). These stocks are Physicians Realty Trust (NYSE:DOC), Parsons Corporation (NYSE:PSN), Hancock Whitney Corporation (NASDAQ:HWC), and Associated Banc Corp (NYSE:ASB). This group of stocks’ market caps match ELP’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| DOC | 14 | 67660 | 2 |
| PSN | 12 | 74996 | -3 |
| HWC | 18 | 96247 | 2 |
| ASB | 20 | 209005 | 1 |
| Average | 16 | 111977 | 0.5 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 16 hedge funds with bullish positions and the average amount invested in these stocks was $112 million. That figure was $61 million in ELP’s case. Associated Banc Corp (NYSE:ASB) is the most popular stock in this table. On the other hand Parsons Corporation (NYSE:PSN) is the least popular one with only 12 bullish hedge fund positions. Compared to these stocks Companhia Paranaense de Energia – COPEL (NYSE:ELP) is even less popular than PSN. Hedge funds clearly dropped the ball on ELP as the stock delivered strong returns, though hedge funds’ consensus picks still generated respectable returns. 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. A small number of hedge funds were also right about betting on ELP as the stock returned 21.6% during the fourth quarter (through the end of November) and outperformed the market by an even larger margin.
Disclosure: None. This article was originally published at Insider Monkey.
