Is NiSource Inc. (NYSE:NI) worth your attention right now? Investors who are in the know are becoming less confident. The number of long hedge fund positions dropped by 5 in recent months.
According to most investors, hedge funds are seen as unimportant, outdated investment tools of yesteryear. While there are more than 8000 funds with their doors open at present, we at Insider Monkey choose to focus on the top tier of this group, close to 450 funds. It is estimated that this group oversees most of all hedge funds’ total capital, and by watching their best picks, we have formulated a number of investment strategies that have historically outpaced the market. Our small-cap hedge fund strategy outstripped the S&P 500 index by 18 percentage points a year for a decade in our back tests, and since we’ve began to sharing our picks with our subscribers at the end of August 2012, we have outpaced the S&P 500 index by 24 percentage points in 7 months (see the details here).
Just as integral, optimistic insider trading activity is another way to parse down the marketplace. Obviously, there are plenty of reasons for a corporate insider to drop shares of his or her company, but only one, very simple reason why they would behave bullishly. Several academic studies have demonstrated the market-beating potential of this tactic if investors know what to do (learn more here).
Keeping this in mind, let’s take a look at the recent action regarding NiSource Inc. (NYSE:NI).
What have hedge funds been doing with NiSource Inc. (NYSE:NI)?
Heading into 2013, a total of 14 of the hedge funds we track held long positions in this stock, a change of -26% from the third quarter. With hedge funds’ capital changing hands, there exists an “upper tier” of notable hedge fund managers who were upping their stakes meaningfully.
Of the funds we track, Millennium Management, managed by Israel Englander, holds the most valuable position in NiSource Inc. (NYSE:NI). Millennium Management has a $52 million position in the stock, comprising 0.3% of its 13F portfolio. Coming in second is D E Shaw, managed by D. E. Shaw, which held a $19 million position; the fund has 0% of its 13F portfolio invested in the stock. Some other peers that are bullish include John A. Levin’s Levin Capital Strategies, David Harding’s Winton Capital Management and Phill Gross and Robert Atchinson’s Adage Capital Management.
Judging by the fact that NiSource Inc. (NYSE:NI) has witnessed falling interest from hedge fund managers, it’s safe to say that there lies a certain “tier” of funds that slashed their entire stakes heading into 2013. It’s worth mentioning that Louis Navellier’s Navellier & Associates dumped the biggest stake of the “upper crust” of funds we track, worth an estimated $48 million in stock., and Dmitry Balyasny of Balyasny Asset Management was right behind this move, as the fund cut about $8 million worth. These transactions are intriguing to say the least, as aggregate hedge fund interest dropped by 5 funds heading into 2013.
How are insiders trading NiSource Inc. (NYSE:NI)?
Insider trading activity, especially when it’s bullish, is most useful when the company in focus has experienced transactions within the past six months. Over the latest 180-day time period, NiSource Inc. (NYSE:NI) has seen zero unique insiders purchasing, and 3 insider sales (see the details of insider trades here).
Let’s also take a look at hedge fund and insider activity in other stocks similar to NiSource Inc. (NYSE:NI). These stocks are Public Service Enterprise Group Inc. (NYSE:PEG), Northeast Utilities System (NYSE:NU), CenterPoint Energy, Inc. (NYSE:CNP), Ameren Corp (NYSE:AEE), and NRG Energy Inc (NYSE:NRG). All of these stocks are in the diversified utilities industry and their market caps resemble NI’s market cap.
| Company Name | # of Hedge Funds | # of Insiders Buying | # of Insiders Selling |
| Public Service Enterprise Group Inc. (NYSE:PEG) | 8 | 0 | 2 |
| Northeast Utilities System (NYSE:NU) | 9 | 0 | 5 |
| CenterPoint Energy, Inc. (NYSE:CNP) | 19 | 0 | 3 |
| Ameren Corp (NYSE:AEE) | 21 | 0 | 0 |
| NRG Energy Inc (NYSE:NRG) | 34 | 0 | 1 |
With the returns shown by our strategies, everyday investors should always keep an eye on hedge fund and insider trading sentiment, and NiSource Inc. (NYSE:NI) shareholders fit into this picture quite nicely.
