This Metric Says You Are Smart to Buy Entergy Corporation (ETR)

Entergy Corporation (NYSE:ETR) was in 15 hedge funds’ portfolio at the end of the first quarter of 2013. ETR shareholders have witnessed an increase in enthusiasm from smart money lately. There were 13 hedge funds in our database with ETR positions at the end of the previous quarter.

At the moment, there are a multitude of indicators market participants can use to monitor their holdings. A pair 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 top money managers can trounce the market by a healthy amount (see just how much).

Just as key, positive insider trading activity is another way to parse down the financial markets. Obviously, there are many incentives for an insider to get rid of shares of his or her company, but only one, very simple reason why they would initiate a purchase. Many academic studies have demonstrated the impressive potential of this method if you know what to do (learn more here).

Now, it’s important to take a gander at the key action encompassing Entergy Corporation (NYSE:ETR).

What does the smart money think about Entergy Corporation (NYSE:ETR)?

Heading into Q2, 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 sentiment swirling, there exists a select group of noteworthy hedge fund managers who were boosting their holdings substantially.

Of the funds we track, Pzena Investment Management, managed by Richard S. Pzena, holds the biggest position in Entergy Corporation (NYSE:ETR). Pzena Investment Management has a $264.9 million position in the stock, comprising 1.9% of its 13F portfolio. The second largest stake is held by First Eagle Investment Management, managed by Jean-Marie Eveillard, which held a $229 million position; 0.8% of its 13F portfolio is allocated to the company. Remaining peers with similar optimism include Ken Griffin’s Citadel Investment Group, Cliff Asness’s AQR Capital Management and Glenn Russell Dubin’s Highbridge Capital Management.

Consequently, key money managers were breaking ground themselves. Arrowstreet Capital, managed by Peter Rathjens, Bruce Clarke and John Campbell, created the most outsized position in Entergy Corporation (NYSE:ETR). Arrowstreet Capital had 13 million invested in the company at the end of the quarter. John Fichthorn’s Dialectic Capital Management also made a $4.7 million investment in the stock during the quarter. The other funds with brand new ETR positions are Matthew Tewksbury’s Stevens Capital Management, John Overdeck and David Siegel’s Two Sigma Advisors, and D. E. Shaw’s D E Shaw.

What have insiders been doing with Entergy Corporation (NYSE:ETR)?

Bullish insider trading is most useful when the company in question has experienced transactions within the past 180 days. Over the latest 180-day time frame, Entergy Corporation (NYSE:ETR) has seen zero unique insiders buying, and 1 insider sales (see the details of insider trades here).

Let’s check out hedge fund and insider activity in other stocks similar to Entergy Corporation (NYSE:ETR). These stocks are The AES Corporation (NYSE:AES), Calpine Corporation (NYSE:CPN), Wisconsin Energy Corporation (NYSE:WEC), Companhia Energetica Minas Gerais (ADR) (NYSE:CIG), and DTE Energy Co (NYSE:DTE). This group of stocks belong to the electric utilities industry and their market caps resemble ETR’s market cap.