We hate to say this but, we told you so. On February 27th we published an article with the title Recession is Imminent: We Need A Travel Ban NOW and predicted a US recession when the S&P 500 Index was trading at the 3150 level. We also told you to short the market and buy long-term Treasury bonds. Our article also called for a total international travel ban. While we were warning you, President Trump minimized the threat and failed to act promptly. As a result of his inaction, we will now experience a deeper recession (see why hell is coming).
In these volatile markets we scrutinize hedge fund filings to get a reading on which direction each stock might be going. Our extensive research has shown that imitating the smart money can generate significant returns for retail investors, which is why we track nearly 835 active prominent money managers and analyze their quarterly 13F filings. The stocks that are heavily bought by hedge funds historically outperformed the market, though there is no shortage of high profile failures like hedge funds’ 2018 losses in Facebook and Apple. Let’s take a closer look at what the funds we track think about Clearway Energy, Inc. (NYSE:CWEN) in this article.
Clearway Energy, Inc. (NYSE:CWEN) shareholders have witnessed an increase in activity from the world’s largest hedge funds recently. CWEN was in 23 hedge funds’ portfolios at the end of December. There were 21 hedge funds in our database with CWEN positions at the end of the previous quarter. Our calculations also showed that CWEN isn’t among the 30 most popular stocks among hedge funds (click for Q4 rankings and see the video at the end of this article for Q3 rankings).
Hedge funds’ reputation as shrewd investors has been tarnished in the last decade as their hedged returns couldn’t keep up with the unhedged returns of the market indices. Our research was able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by more than 41 percentage points since March 2017 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that’ll significantly underperform the market. We have been tracking and sharing the list of these stocks since February 2017 and they lost 35.3% through March 3rd. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
Paul Tudor Jones of Tudor Investment Corp
We leave no stone unturned when looking for the next great investment idea. For example we recently identified a stock that trades 25% below the net cash on its balance sheet. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences, and go through short-term trade recommendations like this one. We even check out the recommendations of services with hard to believe track records. Our best call in 2020 was shorting the market when S&P 500 was trading at 3150 after realizing the coronavirus pandemic’s significance before most investors. Keeping this in mind let’s go over the fresh hedge fund action encompassing Clearway Energy, Inc. (NYSE:CWEN).
How are hedge funds trading Clearway Energy, Inc. (NYSE:CWEN)?
At Q4’s end, a total of 23 of the hedge funds tracked by Insider Monkey were long this stock, a change of 10% from the third quarter of 2019. Below, you can check out the change in hedge fund sentiment towards CWEN over the last 18 quarters. With hedge funds’ capital changing hands, there exists an “upper tier” of key hedge fund managers who were upping their holdings considerably (or already accumulated large positions).
Of the funds tracked by Insider Monkey, Renaissance Technologies, holds the largest position in Clearway Energy, Inc. (NYSE:CWEN). Renaissance Technologies has a $54.9 million position in the stock, comprising less than 0.1%% of its 13F portfolio. Sitting at the No. 2 spot is Stephen C. Freidheim of Cyrus Capital Partners, with a $49 million position; the fund has 5.7% of its 13F portfolio invested in the stock. Some other peers with similar optimism comprise Renaissance Technologies, Mark Lee’s Mountaineer Partners Management and Jeremy Carton and Gilbert Li’s Alta Fundamental Advisers. In terms of the portfolio weights assigned to each position Mountaineer Partners Management allocated the biggest weight to Clearway Energy, Inc. (NYSE:CWEN), around 17.31% of its 13F portfolio. Waterstone Capital Management is also relatively very bullish on the stock, setting aside 9.28 percent of its 13F equity portfolio to CWEN.
As one would reasonably expect, some big names were breaking ground themselves. Waterstone Capital Management, managed by Shawn Bergerson and Martin Kalish, initiated the most outsized position in Clearway Energy, Inc. (NYSE:CWEN). Waterstone Capital Management had $9.2 million invested in the company at the end of the quarter. Brian Olson, Baehyun Sung, and Jamie Waters’s Blackstart Capital also made a $4.2 million investment in the stock during the quarter. The other funds with new positions in the stock are Matthew L Pinz’s Pinz Capital, Paul Marshall and Ian Wace’s Marshall Wace LLP, and Paul Tudor Jones’s Tudor Investment Corp.
Let’s now take a look at hedge fund activity in other stocks – not necessarily in the same industry as Clearway Energy, Inc. (NYSE:CWEN) but similarly valued. These stocks are Cinemark Holdings, Inc. (NYSE:CNK), RBC Bearings Incorporated (NASDAQ:ROLL), TriNet Group Inc (NYSE:TNET), and Tenet Healthcare Corp (NYSE:THC). This group of stocks’ market valuations are similar to CWEN’s market valuation.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| CNK | 22 | 219355 | -1 |
| ROLL | 10 | 48753 | 3 |
| TNET | 20 | 388310 | -1 |
| THC | 34 | 1170950 | 8 |
| Average | 21.5 | 456842 | 2.25 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 21.5 hedge funds with bullish positions and the average amount invested in these stocks was $457 million. That figure was $233 million in CWEN’s case. Tenet Healthcare Corp (NYSE:THC) is the most popular stock in this table. On the other hand RBC Bearings Incorporated (NASDAQ:ROLL) is the least popular one with only 10 bullish hedge fund positions. Clearway Energy, Inc. (NYSE:CWEN) is not the most popular stock in this group but hedge fund interest is still above average. Our calculations showed that top 20 most popular stocks among hedge funds returned 41.3% in 2019 and outperformed the S&P 500 ETF (SPY) by 10.1 percentage points. These stocks lost 17.4% in 2020 through March 25th but still beat the market by 5.5 percentage points. Hedge funds were also right about betting on CWEN as the stock returned -6.4% during the first quarter (through March 25th) and outperformed the market. Hedge funds were rewarded for their relative bullishness.
Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.
Disclosure: None. This article was originally published at Insider Monkey.
