Is The AES Corporation (NYSE:AES) a good bet right now? We like to analyze hedge fund sentiment before conducting days of in-depth research. We do so because hedge funds and other elite investors have numerous Ivy League graduates, expert network advisers, and supply chain tipsters working or consulting for them. There is not a shortage of news stories covering failed hedge fund investments and it is a fact that hedge funds' picks don't beat the market 100% of the time, but their consensus picks have historically done very well and have outperformed the market after adjusting for risk.
The AES Corporation (NYSE:AES) investors should be aware of an increase in support from the world's most elite money managers recently. Our calculations also showed that AES isn't among the 30 most popular stocks among hedge funds (view the video below). Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.
In the 21st century investor’s toolkit there are a large number of methods stock traders employ to size up stocks. A duo of the most innovative methods are hedge fund and insider trading signals. Our researchers have shown that, historically, those who follow the best picks of the top fund managers can outpace the S&P 500 by a solid amount (see the details here).
Unlike some fund managers who are betting on Dow reaching 40000 in a year, our long-short investment strategy doesn't rely on bull markets to deliver double digit returns. We only rely on hedge fund buy/sell signals. We're going to take a glance at the key hedge fund action regarding The AES Corporation (NYSE:AES).
How have hedgies been trading The AES Corporation (NYSE:AES)?
Heading into the third quarter of 2019, a total of 27 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 13% from one quarter earlier. Below, you can check out the change in hedge fund sentiment towards AES over the last 16 quarters. So, let's check out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
More specifically, Renaissance Technologies was the largest shareholder of The AES Corporation (NYSE:AES), with a stake worth $166.4 million reported as of the end of March. Trailing Renaissance Technologies was AQR Capital Management, which amassed a stake valued at $134 million. ValueAct Capital, Two Sigma Advisors, and Millennium Management were also very fond of the stock, giving the stock large weights in their portfolios.
With a general bullishness amongst the heavyweights, key hedge funds have jumped into The AES Corporation (NYSE:AES) headfirst. Becker Drapkin Management, managed by Matthew Drapkin and Steven R. Becker, established the most outsized position in The AES Corporation (NYSE:AES). Becker Drapkin Management had $4.3 million invested in the company at the end of the quarter. Matthew Tewksbury's Stevens Capital Management also initiated a $1.4 million position during the quarter. The other funds with brand new AES positions are Minhua Zhang's Weld Capital Management, David Andre and Astro Teller's Cerebellum Capital, and Michael Platt and William Reeves's BlueCrest Capital Mgmt..
Let's now take a look at hedge fund activity in other stocks - not necessarily in the same industry as The AES Corporation (NYSE:AES) but similarly valued. We will take a look at TechnipFMC plc (NYSE:FTI), Fidelity National Financial Inc (NYSE:FNF), FactSet Research Systems Inc. (NYSE:FDS), and Tiffany & Co. (NYSE:TIF). This group of stocks' market caps match AES's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position FTI,25,863411,0 FNF,29,326008,-1 FDS,19,345992,1 TIF,22,1455290,-8 Average,23.75,747675,-2 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 23.75 hedge funds with bullish positions and the average amount invested in these stocks was $748 million. That figure was $504 million in AES's case. Fidelity National Financial Inc (NYSE:FNF) is the most popular stock in this table. On the other hand FactSet Research Systems Inc. (NYSE:FDS) is the least popular one with only 19 bullish hedge fund positions. The AES Corporation (NYSE:AES) is not the most popular stock in this group but hedge fund interest is still above average. This is a slightly positive signal but we'd rather spend our time researching stocks that hedge funds are piling on. Our calculations showed that top 20 most popular stocks among hedge funds returned 24.4% in 2019 through September 30th and outperformed the S&P 500 ETF (SPY) by 4 percentage points. Unfortunately AES wasn't nearly as popular as these 20 stocks and hedge funds that were betting on AES were disappointed as the stock returned -1.7% during the third quarter and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 20 most popular stocks among hedge funds as many of these stocks already outperformed the market so far this year.
Disclosure: None. This article was originally published at Insider Monkey.