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At Insider Monkey, we pore over the filings of nearly 750 top investment firms every quarter, a process we have now completed for the latest reporting period. The data we've gathered as a result gives us access to a wealth of collective knowledge based on these firms' portfolio holdings as of September 30. In this article, we will use that wealth of knowledge to determine whether or not Clearway Energy, Inc. (NYSE:CWEN) makes for a good investment right now.
Is Clearway Energy, Inc. (NYSE:CWEN) a bargain? Prominent investors are taking an optimistic view. The number of bullish hedge fund positions went up by 1 recently. Our calculations also showed that CWEN isn't among the 30 most popular stocks among hedge funds (click for Q3 rankings and see the video below for Q2 rankings).
Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.
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 has shown that hedge funds' small-cap stock picks managed to beat the market by double digits annually between 1999 and 2016, but the margin of outperformance has been declining in recent years. Nevertheless, we were still able to identify in advance a select group of hedge fund holdings that outperformed the Russell 2000 ETFs by 40 percentage points since May 2014 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that underperformed the market by 10 percentage points annually between 2006 and 2017. Interestingly the margin of underperformance of these stocks has been increasing in recent years. Investors who are long the market and short these stocks would have returned more than 27% annually between 2015 and 2017. We have been tracking and sharing the list of these stocks since February 2017 in our quarterly newsletter.
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David Tepper of Appaloosa Management[/caption]
Unlike the largest US hedge funds that are convinced Dow will soar past 40,000 or the world's most bearish hedge fund that's more convinced than ever that a crash is coming, our long-short investment strategy doesn't rely on bull or bear markets to deliver double digit returns. We only rely on the best performing hedge funds' buy/sell signals. Let's analyze the key hedge fund action encompassing Clearway Energy, Inc. (NYSE:CWEN).
How have hedgies been trading Clearway Energy, Inc. (NYSE:CWEN)?
At the end of the third quarter, a total of 20 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 5% from the previous quarter. Below, you can check out the change in hedge fund sentiment towards CWEN over the last 17 quarters. With hedge funds' positions undergoing their usual ebb and flow, there exists a few noteworthy hedge fund managers who were boosting their holdings considerably (or already accumulated large positions).
The largest stake in Clearway Energy, Inc. (NYSE:CWEN) was held by Renaissance Technologies, which reported holding $43.6 million worth of stock at the end of September. It was followed by Cyrus Capital Partners with a $42.4 million position. Other investors bullish on the company included Appaloosa Management, Alta Fundamental Advisers, and Governors Lane. In terms of the portfolio weights assigned to each position Cyrus Capital Partners allocated the biggest weight to Clearway Energy, Inc. (NYSE:CWEN), around 6.05% of its 13F portfolio. Alta Fundamental Advisers is also relatively very bullish on the stock, designating 5.59 percent of its 13F equity portfolio to CWEN.
Consequently, specific money managers have jumped into Clearway Energy, Inc. (NYSE:CWEN) headfirst. Arosa Capital Management, managed by Till Bechtolsheimer, initiated the most outsized position in Clearway Energy, Inc. (NYSE:CWEN). Arosa Capital Management had $4.2 million invested in the company at the end of the quarter. Philip Hempleman's Ardsley Partners also made a $1.8 million investment in the stock during the quarter. The other funds with brand new CWEN positions are Richard Driehaus's Driehaus Capital, David Harding's Winton Capital Management, and Donald Sussman's Paloma Partners.
Let's go over hedge fund activity in other stocks - not necessarily in the same industry as Clearway Energy, Inc. (NYSE:CWEN) but similarly valued. These stocks are Bank OZK (NASDAQ:OZK), Glacier Bancorp, Inc. (NASDAQ:GBCI), LogMeIn Inc (NASDAQ:LOGM), and United Therapeutics Corporation (NASDAQ:UTHR). All of these stocks' market caps match CWEN's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position OZK,19,282599,-2 GBCI,13,47527,-4 LOGM,29,295210,2 UTHR,30,1131522,0 Average,22.75,439215,-1 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 22.75 hedge funds with bullish positions and the average amount invested in these stocks was $439 million. That figure was $182 million in CWEN's case. United Therapeutics Corporation (NASDAQ:UTHR) is the most popular stock in this table. On the other hand Glacier Bancorp, Inc. (NASDAQ:GBCI) is the least popular one with only 13 bullish hedge fund positions. Clearway Energy, Inc. (NYSE:CWEN) is not the least popular stock in this group but hedge fund interest is still below average. Our calculations showed that top 20 most popular stocks among hedge funds returned 37.4% in 2019 through the end of November and outperformed the S&P 500 ETF (SPY) by 9.9 percentage points. A small number of hedge funds were also right about betting on CWEN, though not to the same extent, as the stock returned 9.8% during the first two months of the fourth quarter and outperformed the market.
Disclosure: None. This article was originally published at Insider Monkey.