The 700+ hedge funds and money managers tracked by Insider Monkey have already compiled and submitted their 13F filings for the third quarter, which unveil their equity positions as of September 30. We went through these filings, fixed typos and other more significant errors and identified the changes in hedge fund positions. Our extensive review of these public filings is finally over, so this article is set to reveal the smart money sentiment towards NorthWestern Corp (NYSE:NWE).
Is NorthWestern Corp (NYSE:NWE) the right investment to pursue these days? Investors who are in the know are actually in a pessimistic mood. The number of long hedge fund positions went down by 2 in recent months. NWE was in 6 hedge funds’ portfolios at the end of September. There were 8 hedge funds in our database with NWE positions at the end of June. At the end of this article we will also compare NWE to other stocks including MFA Financial, Inc. (NYSE:MFA), Brinker International, Inc. (NYSE:EAT), and Sunstone Hotel Investors Inc (NYSE:SHO) to get a better sense of its popularity.
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We follow over 700 hedge funds and other institutional investors and by analyzing their quarterly 13F filings, we identify stocks that they are collectively bullish on and develop investment strategies based on this data. One strategy that outperformed the market over the last year involves selecting the 100 best-performing funds and identifying the 30 mid-cap stocks that they are collectively most bullish on. Over the past year, this strategy generated returns of 18%, topping the 8% gain registered by S&P 500 ETFs. We launched this strategy 2.5 years ago and it returned more than 39% since then, vs. 22% gain registered by the S&P 500 ETFs.
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How are hedge funds trading NorthWestern Corp (NYSE:NWE)?
Heading into the fourth quarter of 2016, a total of 6 of the hedge funds tracked by Insider Monkey held long positions in this stock, a 25% decline from the previous quarter. The graph below displays the number of hedge funds with bullish positions in NWE over the last 5 quarters, which has sunk to a yearly low. So, let’s examine which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
Of the funds tracked by Insider Monkey, GAMCO Investors, led by Mario Gabelli, holds the biggest position in NorthWestern Corp (NYSE:NWE). GAMCO Investors has a $17.4 million position in the stock. The second most bullish fund manager is Cliff Asness of AQR Capital Management, with a $6.9 million position. Other professional money managers that hold long positions include Millennium Management, one of the largest hedge funds in the world, Jim Simons’ Renaissance Technologies, and David E. Shaw’s D E Shaw. We should note that none of these hedge funds are among our list of the 100 best performing hedge funds, which is based on the performance of their 13F long positions in non-micro-cap stocks.
Because NorthWestern Corp (NYSE:NWE) has experienced bearish sentiment from the smart money, logic holds that there lies a certain “tier” of fund managers that slashed their entire stakes by the end of the third quarter. It’s worth mentioning that Glenn Russell Dubin’s Highbridge Capital Management cut the largest investment of the 700 funds followed by Insider Monkey, comprising an estimated $2.4 million in stock. Matthew Tewksbury’s fund, Stevens Capital Management, also dumped its stock, about $0.8 million worth.
Let’s go over hedge fund activity in other stocks similar to NorthWestern Corp (NYSE:NWE). These stocks are MFA Financial, Inc. (NYSE:MFA), Brinker International, Inc. (NYSE:EAT), Sunstone Hotel Investors Inc (NYSE:SHO), and Kite Pharma Inc (NASDAQ:KITE). All of these stocks’ market caps are similar to NWE’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| MFA | 11 | 54202 | -1 |
| EAT | 22 | 163128 | -2 |
| SHO | 7 | 22255 | -2 |
| KITE | 27 | 293694 | 8 |
As you can see these stocks had an average of 17 hedge funds with bullish positions and the average amount invested in these stocks was $133 million. That figure was $37 million in NWE’s case. Kite Pharma Inc (NASDAQ:KITE) is the most popular stock in this table. On the other hand Sunstone Hotel Investors Inc (NYSE:SHO) is the least popular one with only 7 bullish hedge fund positions. Compared to these stocks NorthWestern Corp (NYSE:NWE) is even less popular than SHO. 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.
Disclosure: None
