PNM Resources, Inc. (PNM): Hedge Funds Are Bullish and Insiders Are Bearish, What Should You Do?

PNM Resources, Inc. (NYSE:PNM) was in 15 hedge funds’ portfolio at the end of March. PNM has seen an increase in support from the world’s most elite money managers in recent months. There were 13 hedge funds in our database with PNM holdings at the end of the previous quarter.

In the financial world, there are dozens of gauges market participants can use to monitor stocks. Some of the most under-the-radar are hedge fund and insider trading sentiment. At Insider Monkey, our studies have shown that, historically, those who follow the best picks of the elite money managers can trounce the broader indices by a healthy margin (see just how much).

Just as key, bullish insider trading activity is another way to parse down the marketplace. As the old adage goes: there are plenty of incentives for a bullish insider to drop shares of his or her company, but only one, very obvious reason why they would buy. Plenty of academic studies have demonstrated the valuable potential of this method if shareholders know what to do (learn more here).

Keeping this in mind, it’s important to take a look at the latest action encompassing PNM Resources, Inc. (NYSE:PNM).

What have hedge funds been doing with PNM Resources, Inc. (NYSE:PNM)?

In preparation for this quarter, a total of 15 of the hedge funds we track were long in this stock, a change of 15% from the previous quarter. With the smart money’s positions undergoing their usual ebb and flow, there exists an “upper tier” of noteworthy hedge fund managers who were increasing their stakes considerably.

When looking at the hedgies we track, Mario Gabelli’s GAMCO Investors had the most valuable position in PNM Resources, Inc. (NYSE:PNM), worth close to $71.3 million, accounting for 0.5% of its total 13F portfolio. The second largest stake is held by Chuck Royce of Royce & Associates, with a $14.9 million position; the fund has less than 0.1%% of its 13F portfolio invested in the stock. Some other hedge funds with similar optimism include Jim Simons’s Renaissance Technologies, Israel Englander’s Millennium Management and Cliff Asness’s AQR Capital Management.

Now, key hedge funds have been driving this bullishness. Stevens Capital Management, managed by Matthew Tewksbury, established the most valuable position in PNM Resources, Inc. (NYSE:PNM). Stevens Capital Management had 1.1 million invested in the company at the end of the quarter. Joel Greenblatt’s Gotham Asset Management also made a $0.6 million investment in the stock during the quarter. The other funds with brand new PNM positions are David Costen Haley’s HBK Investments and Matthew Hulsizer’s PEAK6 Capital Management.

What have insiders been doing with PNM Resources, Inc. (NYSE:PNM)?

Insider purchases made by high-level executives is at its handiest when the company in question has experienced transactions within the past 180 days. Over the last 180-day time frame, PNM Resources, Inc. (NYSE:PNM) has seen zero unique insiders purchasing, and 6 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 PNM Resources, Inc. (NYSE:PNM). These stocks are Vectren Corporation (NYSE:VVC), MGE Energy, Inc. (NASDAQ:MGEE), NorthWestern Corp (NYSE:NWE), Avista Corp (NYSE:AVA), and ALLETE Inc (NYSE:ALE). This group of stocks belong to the diversified utilities industry and their market caps are closest to PNM’s market cap.

With the returns exhibited by the aforementioned time-tested strategies, everyday investors must always watch hedge fund and insider trading sentiment, and PNM Resources, Inc. (NYSE:PNM) is an important part of this process.

Click here to learn why you should track hedge funds