NorthWestern Corp (NYSE:NWE) was in 11 hedge funds’ portfolio at the end of the first quarter of 2013. NWE investors should be aware of an increase in support from the world’s most elite money managers of late. There were 10 hedge funds in our database with NWE positions at the end of the previous quarter.
If you’d ask most traders, hedge funds are perceived as worthless, old financial vehicles of the past. While there are more than 8000 funds in operation at present, we at Insider Monkey hone in on the bigwigs of this club, about 450 funds. It is widely believed that this group oversees the majority of the hedge fund industry’s total asset base, and by keeping an eye on their highest performing investments, we have brought to light a number of investment strategies that have historically outperformed the broader indices. Our small-cap hedge fund strategy outperformed the S&P 500 index by 18 percentage points a year for a decade in our back tests, and since we’ve started sharing our picks with our subscribers at the end of August 2012, we have beaten the S&P 500 index by 23.3 percentage points in 8 months (see all of our picks from August).
Just as integral, optimistic insider trading sentiment is a second way to break down the marketplace. As the old adage goes: there are plenty of reasons for an executive to cut shares of his or her company, but just one, very simple reason why they would behave bullishly. Plenty of academic studies have demonstrated the impressive potential of this method if “monkeys” know what to do (learn more here).
Keeping this in mind, it’s important to take a look at the latest action surrounding NorthWestern Corp (NYSE:NWE).
How have hedgies been trading NorthWestern Corp (NYSE:NWE)?
In preparation for this quarter, a total of 11 of the hedge funds we track were bullish in this stock, a change of 10% from the previous quarter. With hedge funds’ positions undergoing their usual ebb and flow, there exists a select group of key hedge fund managers who were boosting their stakes meaningfully.
When looking at the hedgies we track, Adage Capital Management, managed by Phill Gross and Robert Atchinson, holds the biggest position in NorthWestern Corp (NYSE:NWE). Adage Capital Management has a $39.9 million position in the stock, comprising 0.1% of its 13F portfolio. Sitting at the No. 2 spot is Israel Englander of Millennium Management, with a $24.1 million position; the fund has 0.1% of its 13F portfolio invested in the stock. Other hedgies with similar optimism include Mario Gabelli’s GAMCO Investors, Cliff Asness’s AQR Capital Management and Thomas M. Fitzgerald’s Longbow Capital Partners.
Consequently, key hedge funds were leading the bulls’ herd. Carlson Capital, managed by Clint Carlson, established the biggest position in NorthWestern Corp (NYSE:NWE). Carlson Capital had 4 million invested in the company at the end of the quarter. John Overdeck and David Siegel’s Two Sigma Advisors also made a $0.7 million investment in the stock during the quarter.
What have insiders been doing with NorthWestern Corp (NYSE:NWE)?
Insider trading activity, especially when it’s bullish, is particularly usable when the company in question has experienced transactions within the past half-year. Over the last half-year time frame, NorthWestern Corp (NYSE:NWE) has experienced 1 unique insiders buying, and zero insider sales (see the details of insider trades here).
Let’s check out hedge fund and insider activity in other stocks similar to NorthWestern Corp (NYSE:NWE). These stocks are Otter Tail Corporation (NASDAQ:OTTR), ALLETE Inc (NYSE:ALE), PNM Resources, Inc. (NYSE:PNM), MGE Energy, Inc. (NASDAQ:MGEE), and Avista Corp (NYSE:AVA). This group of stocks are in the diversified utilities industry and their market caps resemble NWE’s market cap.
| Company Name | # of Hedge Funds | # of Insiders Buying | # of Insiders Selling |
| Otter Tail Corporation (NASDAQ:OTTR) | 6 | 0 | 3 |
| ALLETE Inc (NYSE:ALE) | 6 | 0 | 7 |
| PNM Resources, Inc. (NYSE:PNM) | 15 | 0 | 6 |
| MGE Energy, Inc. (NASDAQ:MGEE) | 5 | 1 | 0 |
| Avista Corp (NYSE:AVA) | 11 | 0 | 7 |
With the returns demonstrated by our tactics, retail investors should always monitor hedge fund and insider trading sentiment, and NorthWestern Corp (NYSE:NWE) is no exception.
