Does WEC Energy Group Inc (NYSE:WEC) represent a good buying opportunity at the moment? Let’s briefly check the hedge fund sentiment towards the company. Hedge fund firms constantly search out bright intellectuals and highly-experienced employees and throw away millions of dollars on research activities, so it is no wonder why they tend to generate millions in profits each year. It is also true that some hedge fund players fail unconceivably on some occasions, but their stock picks have been generating superior risk-adjusted returns on average over the years.
Follow Wec Energy Group Inc. (NYSE:WEC)
Follow Wec Energy Group Inc. (NYSE:WEC)
We care about hedge fund sentiment because historically hedge funds’ stock picks delivered strong risk adjusted returns. There are certain segments of the market where hedge funds’ stock picks performed much better than its benchmarks. For instance, the 30 most popular mid-cap stocks among the best performing hedge funds returned 18% over the last 12 months outpacing S&P 500 Index by more than 10 percentage points. We developed this strategy 2.5 years ago and started sharing its picks in our quarterly newsletter. It bested the S&P 500 Index ETFs by delivering a solid 39% vs. 22% gain for its benchmarks.
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With all of this in mind, let’s analyze the latest action regarding WEC Energy Group Inc (NYSE:WEC).
Hedge fund activity in WEC Energy Group Inc (NYSE:WEC)
At the end of the third quarter, a total of 20 of the hedge funds tracked by Insider Monkey were long this stock, a change of 54% from the previous quarter. With hedgies’ capital changing hands, there exists a select group of noteworthy hedge fund managers who were increasing their stakes substantially (or already accumulated large positions).
When looking at the institutional investors followed by Insider Monkey, Renaissance Technologies, managed by Jim Simons, holds the biggest position in WEC Energy Group Inc (NYSE:WEC). Renaissance Technologies has a $23.9 million position in the stock, comprising less than 0.1%% of its 13F portfolio. Coming in second is Millennium Management, led by Israel Englander, holding a $19.1 million position; the fund has less than 0.1%% of its 13F portfolio invested in the stock. Some other professional money managers that are bullish comprise Cliff Asness’s AQR Capital Management, Ken Griffin’s Citadel Investment Group and Glenn Russell Dubin’s Highbridge Capital Management.
As industrywide interest jumped, key hedge funds have been driving this bullishness. Renaissance Technologies, managed by Jim Simons, initiated the most outsized position in WEC Energy Group Inc (NYSE:WEC). Renaissance Technologies had $23.9 million invested in the company at the end of the quarter. Glenn Russell Dubin’s Highbridge Capital Management also initiated a $6.7 million position during the quarter. The following funds were also among the new WEC investors: David Harding’s Winton Capital Management, David Costen Haley’s HBK Investments, and Andrew Feldstein and Stephen Siderow’s Blue Mountain Capital.
Let’s check out hedge fund activity in other stocks similar to WEC Energy Group Inc (NYSE:WEC). These stocks are SunTrust Banks, Inc. (NYSE:STI), Campbell Soup Company (NYSE:CPB), TE Connectivity Ltd. (NYSE:TEL), and Boston Properties, Inc. (NYSE:BXP). This group of stocks’ market valuations are similar to WEC’s market valuation.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| STI | 31 | 692819 | 1 |
| CPB | 27 | 290828 | -2 |
| TEL | 23 | 869744 | -2 |
| BXP | 17 | 404364 | -1 |
As you can see these stocks had an average of 24.5 hedge funds with bullish positions and the average amount invested in these stocks was $564 million. That figure was $102 million in WEC’s case. SunTrust Banks, Inc. (NYSE:STI) is the most popular stock in this table. On the other hand Boston Properties, Inc. (NYSE:BXP) is the least popular one with only 17 bullish hedge fund positions. WEC Energy Group Inc (NYSE:WEC) 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 STI might be a better candidate to consider a long position.
