Should You Avoid American States Water Co (AWR)?

The Insider Monkey team has completed processing the quarterly 13F filings for the September quarter submitted by the hedge funds and other money managers included in our extensive database. Most hedge fund investors endured a torrid quarter, which certainly propelled them to adjust their equity holdings so as to maintain the desired risk profile. As a result, the relevancy of these public filings and their content is indisputable, as they may reveal numerous high-potential stocks. The following article will discuss the smart money sentiment towards American States Water Co (NYSE:AWR).

Is American States Water Co (NYSE:AWR) ready to rally soon? Money managers are becoming less hopeful. The number of long hedge fund positions retreated by 2 in recent months. 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 Greif, Inc. (NYSE:GEF), ABM Industries, Inc. (NYSE:ABM), and China Lodging Group, Ltd (ADR) (NASDAQ:HTHT) to gather more data points.

In the eyes of most traders, hedge funds are assumed to be unimportant, outdated financial vehicles of years past. While there are greater than 8000 funds with their doors open today, Our researchers hone in on the masters of this club, about 700 funds. It is estimated that this group of investors administer the lion’s share of the hedge fund industry’s total asset base, and by shadowing their best investments, Insider Monkey has brought to light many investment strategies that have historically outstripped Mr. Market. Insider Monkey’s small-cap hedge fund strategy exceeded the S&P 500 index by 12 percentage points a year for a decade in their back tests.

Keeping this in mind, let’s analyze the fresh action surrounding American States Water Co (NYSE:AWR).

How are hedge funds trading American States Water Co (NYSE:AWR)?

Heading into Q4, a total of 5 of the hedge funds tracked by Insider Monkey were long this stock, a change of -29% from the previous quarter. With hedge funds’ capital changing hands, there exists a few notable hedge fund managers who were increasing their stakes meaningfully (or already accumulated large positions).

According to Insider Monkey’s hedge fund database, Jim Simons’s Renaissance Technologies has the number one position in American States Water Co (NYSE:AWR), worth close to $39.9 million, accounting for 0.1% of its total 13F portfolio. Coming in second is AQR Capital Management, managed by Cliff Asness, which holds a $3.3 million position; the fund has less than 0.1%% of its 13F portfolio invested in the stock. Remaining peers that are bullish include Matthew Hulsizer’s PEAK6 Capital Management and Michael Platt and William Reeves’s BlueCrest Capital Mgmt.

Since American States Water Co (NYSE:AWR) has experienced a slightly bearish sentiment from hedge fund managers, it’s safe to say that there were a few funds that slashed their full holdings last quarter. It’s worth mentioning that Peter Rathjens, Bruce Clarke and John Campbell’s Arrowstreet Capital sold off the biggest stake of all the hedgies watched by Insider Monkey, totaling an estimated $1.8 million in stock. Israel Englander’s fund, Millennium Management, also sold off its holding, about $0.9 million worth. These moves are intriguing to say the least, as total hedge fund interest fell by 2 funds last quarter.

Let’s go over hedge fund activity in other stocks similar to American States Water Co (NYSE:AWR). We will take a look at Greif, Inc. (NYSE:GEF), ABM Industries, Inc. (NYSE:ABM), China Lodging Group, Ltd (ADR) (NASDAQ:HTHT), and M/A-COM Technology Solutions Holdings (NASDAQ:MTSI). This group of stocks’ market valuations are closest to AWR’s market valuation.

As you can see these stocks had an average of 16 hedge funds with bullish positions and the average amount invested in these stocks was $82 million. That figure was $44 million in AWR’s case. Greif, Inc. (NYSE:GEF) is the most popular stock in this table. On the other hand M/A-COM Technology Solutions Holdings (NASDAQ:MTSI) is the least popular one with only nine bullish hedge fund positions. Compared to these stocks American States Water Co (NYSE:AWR) is even less popular than MTSI. Considering that hedge funds aren’t fond of this stock in relation to other companies analyzed in this article, it may be a good idea to analyze it in detail and understand why the smart money isn’t behind this stock. This isn’t necessarily bad news. Although it is possible that hedge funds may think the stock is overpriced and view the stock as a short candidate, they may not be very familiar with the bullish thesis. In either case more research is warranted.