How do you pick the next stock to invest in? One way would be to spend days of research browsing through thousands of publicly traded companies. However, an easier way is to look at the stocks that smart money investors are collectively bullish on. Hedge funds and other institutional investors usually invest large amounts of capital and have to conduct due diligence while choosing their next pick. They don’t always get it right, but, on average, their stock picks historically generated strong returns after adjusting for known risk factors. With this in mind, let’s take a look at the recent hedge fund activity surrounding Exelon Corporation (NYSE:EXC) and determine whether hedge funds had an edge regarding this stock.
Is Exelon Corporation (NYSE:EXC) a buy right now? The smart money was in a bullish mood. The number of long hedge fund bets moved up by 1 recently. Exelon Corporation (NYSE:EXC) was in 36 hedge funds’ portfolios at the end of the third quarter of 2021. The all time high for this statistic is 44. Our calculations also showed that EXC isn’t among the 30 most popular stocks among hedge funds (click for Q3 rankings).
Keith Meister of Corvex Capital
At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, lithium prices have more than doubled over the past year, so we go through lists like the 10 best EV stocks to pick the next Tesla that will deliver a 10x return. Even though we recommend positions in only a tiny fraction of the companies we analyze, we check out as many stocks as we can. Now let’s take a gander at the fresh hedge fund action regarding Exelon Corporation (NYSE:EXC).
Do Hedge Funds Think EXC Is A Good Stock To Buy Now?
At third quarter’s end, a total of 36 of the hedge funds tracked by Insider Monkey were long this stock, a change of 3% from the previous quarter. By comparison, 29 hedge funds held shares or bullish call options in EXC a year ago. With hedgies’ positions undergoing their usual ebb and flow, there exists a few notable hedge fund managers who were adding to their stakes substantially (or already accumulated large positions).
Among these funds, Zimmer Partners held the most valuable stake in Exelon Corporation (NYSE:EXC), which was worth $211.8 million at the end of the third quarter. On the second spot was Electron Capital Partners which amassed $196.3 million worth of shares. Citadel Investment Group, Corvex Capital, and Adage Capital Management were also very fond of the stock, becoming one of the largest hedge fund holders of the company. In terms of the portfolio weights assigned to each position Electron Capital Partners allocated the biggest weight to Exelon Corporation (NYSE:EXC), around 10.38% of its 13F portfolio. Coann Capital is also relatively very bullish on the stock, earmarking 7.08 percent of its 13F equity portfolio to EXC.
As aggregate interest increased, some big names have jumped into Exelon Corporation (NYSE:EXC) headfirst. ExodusPoint Capital, managed by Michael Gelband, created the largest position in Exelon Corporation (NYSE:EXC). ExodusPoint Capital had $42.4 million invested in the company at the end of the quarter. Richard C. Patton’s Courage Capital also initiated a $6.3 million position during the quarter. The following funds were also among the new EXC investors: Clint Carlson’s Carlson Capital, James Morrow’s Callodine Capital Management, and Paul Tudor Jones’s Tudor Investment Corp.
Let’s check out hedge fund activity in other stocks – not necessarily in the same industry as Exelon Corporation (NYSE:EXC) but similarly valued. These stocks are TC Energy Corporation (NYSE:TRP), Vertex Pharmaceuticals Incorporated (NASDAQ:VRTX), Roper Technologies Inc. (NYSE:ROP), Monster Beverage Corp (NASDAQ:MNST), EOG Resources Inc (NYSE:EOG), Palo Alto Networks Inc (NYSE:PANW), and IHS Markit Ltd. (NASDAQ:INFO). This group of stocks’ market caps resemble EXC’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| TRP | 15 | 84084 | -7 |
| VRTX | 55 | 2713283 | -5 |
| ROP | 45 | 1667275 | 4 |
| MNST | 42 | 2134498 | -4 |
| EOG | 47 | 1024547 | 12 |
| PANW | 73 | 5899838 | 4 |
| INFO | 64 | 6723219 | 3 |
| Average | 48.7 | 2892392 | 1 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 48.7 hedge funds with bullish positions and the average amount invested in these stocks was $2892 million. That figure was $1109 million in EXC’s case. Palo Alto Networks Inc (NYSE:PANW) is the most popular stock in this table. On the other hand TC Energy Corporation (NYSE:TRP) is the least popular one with only 15 bullish hedge fund positions. Exelon Corporation (NYSE:EXC) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for EXC is 48.6. Stocks with higher number of hedge fund positions relative to other stocks as well as relative to their historical range receive a higher sentiment score. Our calculations showed that top 5 most popular stocks among hedge funds returned 95.8% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 40 percentage points. These stocks gained 29.6% in 2021 and still beat the market by 3.6 percentage points. A small number of hedge funds were also right about betting on EXC as the stock returned 20.7% since the end of the third quarter (through 1/31) and outperformed the market by an even larger margin.
Follow Exelon Corp (NYSE:EXC)
Follow Exelon Corp (NYSE:EXC)
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Disclosure: None. This article was originally published at Insider Monkey.
