It seems that the masses and most of the financial media hate hedge funds and what they do, but why is this hatred of hedge funds so prominent? At the end of the day, these asset management firms do not gamble the hard-earned money of the people who are on the edge of poverty. Truth be told, most hedge fund managers and other smaller players within this industry are very smart and skilled investors. Of course, they may also make wrong bets in some instances, but no one knows what the future holds and how market participants will react to the bountiful news that floods in each day. The S&P 500 Index gained 7.6% in the 12 month-period that ended November 21, while less than 49% of its stocks beat the benchmark. In contrast, the 30 most popular mid-cap stocks among the top hedge fund investors tracked by the Insider Monkey team returned 18% over the same period, which provides evidence that these money managers do have great stock picking abilities. That’s why we believe it isn’t a waste of time to check out hedge fund sentiment before you invest in a stock like Portland General Electric Company (NYSE:POR).
Portland General Electric Company (NYSE:POR) was included in the equity portfolios of 13 funds from our database at the end of September. The company saw an increase in popularity among smart money investors during the third quarter, as there had been 15 funds long the stock at the end of June. However, the level and the change in hedge fund popularity aren’t the only variables you need to analyze to decipher hedge funds’ perspectives. A stock may witness a boost in popularity but it may still be less popular than similarly priced stocks. That’s why at the end of this article we will examine companies such as Tallgrass Energy GP LP (NYSE:TEGP), USG Corporation (NYSE:USG), and Cabelas Inc (NYSE:CAB) to gather more data points.
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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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Now, we’re going to check out the recent action regarding Portland General Electric Company (NYSE:POR).
What does the smart money think about Portland General Electric Company (NYSE:POR)?
Heading into the fourth quarter of 2016, a total of 13 of the hedge funds tracked by Insider Monkey held long positions in this stock, down by 13% from the previous quarter. On the other hand, there were a total of 11 hedge funds with a bullish position in POR at the beginning of this year. So, let’s check out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
According to publicly available hedge fund and institutional investor holdings data compiled by Insider Monkey, Jim Simons’ Renaissance Technologies holds the largest position in Portland General Electric Company (NYSE:POR). Renaissance Technologies has a $28.1 million position in the stock, comprising less than 0.1%% of its 13F portfolio. The second largest stake is held by Huber Capital Management, led by Joe Huber, holding a $25.3 million position; 1% of its 13F portfolio is allocated to the stock. Remaining peers that hold long positions comprise Dmitry Balyasny’s Balyasny Asset Management, Ken Griffin’s Citadel Investment Group and Cliff Asness’ AQR Capital Management. 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-microcap stocks.
Seeing as Portland General Electric Company (NYSE:POR) has witnessed falling interest from hedge fund managers, it’s safe to say that there exists a select few money managers who sold off their positions entirely during the third quarter. Interestingly, Phill Gross and Robert Atchinson’s Adage Capital Management cashed in the biggest investment of all the hedgies followed by Insider Monkey, valued at close to $44.1 million in stock, and Peter Rathjens, Bruce Clarke and John Campbell’s Arrowstreet Capital was right behind this move, as the fund cut about $10.8 million worth of shares.
Let’s check out hedge fund activity in other stocks similar to Portland General Electric Company (NYSE:POR). These stocks are Tallgrass Energy GP LP (NYSE:TEGP), USG Corporation (NYSE:USG), Cabelas Inc (NYSE:CAB), and Sally Beauty Holdings, Inc. (NYSE:SBH). This group of stocks’ market caps resemble POR’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| TEGP | 6 | 33779 | -1 |
| USG | 26 | 1388098 | 0 |
| CAB | 34 | 961197 | 7 |
| SBH | 12 | 115791 | -5 |
As you can see these stocks had an average of 20 funds with bullish positions and the average amount invested in these stocks was $625 million, which is higher than the $89 million figure in POR’s case. Cabelas Inc (NYSE:CAB) is the most popular stock in this table. On the other hand Tallgrass Energy GP LP (NYSE:TEGP) is the least popular one with only six investors holding long positions. Portland General Electric Company (NYSE:POR) 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. In this regard Cabelas Inc (NYSE:CAB) might be a better candidate to consider taking a long position in.
Disclosure: none
