In the eyes of many market players, hedge funds are assumed to be overrated, outdated investment vehicles of a period lost to current times. Although there are more than 8,000 hedge funds in operation currently, Insider Monkey aim at the bigwigs of this group, close to 525 funds. Analysts calculate that this group has its hands on the lion’s share of the smart money’s total assets, and by monitoring their highest quality picks, we’ve found a number of investment strategies that have historically beaten the S&P 500. Our small-cap hedge fund strategy outpaced 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 trumped the S&P 500 index by 33 percentage points in 11 months (explore the details and some picks here).
Just as key, positive insider trading sentiment is a second way to look at the marketplace. There are plenty of incentives for an insider to downsize shares of his or her company, but just one, very simple reason why they would initiate a purchase. Several empirical studies have demonstrated the impressive potential of this method if piggybackers know what to do (learn more here).
What’s more, let’s study the recent info surrounding Calpine Corporation (NYSE:CPN).
How are hedge funds trading Calpine Corporation (NYSE:CPN)?
In preparation for the third quarter, a total of 27 of the hedge funds we track were long in this stock, a change of 4% from the first quarter. With hedgies’ capital changing hands, there exists an “upper tier” of noteworthy hedge fund managers who were upping their stakes significantly.
Out of the hedge funds we follow, SPO Advisory Corp, managed by John H. Scully, holds the biggest position in Calpine Corporation (NYSE:CPN). SPO Advisory Corp has a $863.8 million position in the stock, comprising 11.6% of its 13F portfolio. Coming in second is Harris Associates, managed by Natixis Global Asset Management, which held a $169.6 million position; the fund has 0.4% of its 13F portfolio invested in the stock. Remaining hedge funds with similar optimism include Larry Robbins’s Glenview Capital, Richard Perry’s Perry Capital and John Burbank’s Passport Capital.
As one would understandably expect, specific money managers have been driving this bullishness. SPO Advisory Corp, managed by John H. Scully, created the most outsized position in Calpine Corporation (NYSE:CPN). SPO Advisory Corp had 863.8 million invested in the company at the end of the quarter. Larry Robbins’s Glenview Capital also initiated a $130.5 million position during the quarter. The following funds were also among the new CPN investors: Richard Perry’s Perry Capital, John Burbank’s Passport Capital, and John A. Levin’s Levin Capital Strategies.
What do corporate executives and insiders think about Calpine Corporation (NYSE:CPN)?
Insider buying made by high-level executives is at its handiest when the company in question has experienced transactions within the past six months. Over the latest 180-day time frame, Calpine Corporation (NYSE:CPN) has seen zero unique insiders buying, and zero insider sales (see the details of insider trades here).
We’ll check out the relationship between both of these indicators in other stocks similar to Calpine Corporation (NYSE:CPN). These stocks are DTE Energy Co (NYSE:DTE), Entergy Corporation (NYSE:ETR), Companhia Energetica Minas Gerais (ADR) (NYSE:CIG), Wisconsin Energy Corporation (NYSE:WEC), and The AES Corporation (NYSE:AES). All of these stocks are in the electric utilities industry and their market caps match CPN’s market cap.
| Company Name | # of Hedge Funds | # of Insiders Buying | # of Insiders Selling |
| DTE Energy Co (NYSE:DTE) | 15 | 0 | 0 |
| Entergy Corporation (NYSE:ETR) | 18 | 0 | 0 |
| Companhia Energetica Minas Gerais (ADR) (NYSE:CIG) | 8 | 0 | 0 |
| Wisconsin Energy Corporation (NYSE:WEC) | 10 | 0 | 0 |
| The AES Corporation (NYSE:AES) | 21 | 0 | 0 |
Using the results shown by our analyses, average investors should always watch hedge fund and insider trading sentiment, and Calpine Corporation (NYSE:CPN) shareholders fit into this picture quite nicely.
