Is Edison International (NYSE:EIX) a good stock to buy right now? We at Insider Monkey like to examine what billionaires and hedge funds think of a company before doing days of research on it. Given their 2 and 20 payment structure, hedge funds have more incentives and resources than the average investor. The funds have access to expert networks and get tips from industry insiders. They also have numerous Ivy League graduates and MBAs. Like everyone else, hedge funds perform miserably at times, but their consensus picks have historically outperformed the market after risk adjustments.
Edison International (NYSE:EIX) has experienced an increase in activity from the world's largest hedge funds lately. Our calculations also showed that EIX isn't among the 30 most popular stocks among hedge funds.
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' large-cap stock picks indeed failed to beat the market between 1999 and 2016. However, we were able to identify in advance a select group of hedge fund holdings that outperformed the market by 32 percentage points since May 2014 through March 12, 2019 (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 27.5% through March 12, 2019. That's why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
We're going to go over the new hedge fund action encompassing Edison International (NYSE:EIX).
What does the smart money think about Edison International (NYSE:EIX)?
At Q4's end, a total of 28 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 12% from the previous quarter. On the other hand, there were a total of 29 hedge funds with a bullish position in EIX a year ago. So, let's check out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
Among these funds, Pzena Investment Management held the most valuable stake in Edison International (NYSE:EIX), which was worth $478.4 million at the end of the third quarter. On the second spot was Renaissance Technologies which amassed $193.9 million worth of shares. Moreover, Arrowstreet Capital, Millennium Management, and Zimmer Partners were also bullish on Edison International (NYSE:EIX), allocating a large percentage of their portfolios to this stock.
As aggregate interest increased, key hedge funds have been driving this bullishness. Arrowstreet Capital, managed by Peter Rathjens, Bruce Clarke and John Campbell, established the most outsized position in Edison International (NYSE:EIX). Arrowstreet Capital had $38.6 million invested in the company at the end of the quarter. William B. Gray's Orbis Investment Management also initiated a $34.8 million position during the quarter. The other funds with brand new EIX positions are Josh Donfeld and David Rogers's Castle Hook Partners, Ray Dalio's Bridgewater Associates, and Gavin Saitowitz and Cisco J. del Valle's Springbok Capital.
Let's also examine hedge fund activity in other stocks similar to Edison International (NYSE:EIX). We will take a look at Sasol Limited (NYSE:SSL), Hewlett Packard Enterprise Company (NYSE:HPE), Newmont Mining Corp (NYSE:NEM), and Advanced Micro Devices, Inc. (NASDAQ:AMD). All of these stocks' market caps match EIX's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position SSL,7,27199,0 HPE,29,831775,-1 NEM,31,405612,5 AMD,28,339975,0 Average,23.75,401140,1 [/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 $401 million. That figure was $1027 million in EIX's case. Newmont Mining Corp (NYSE:NEM) is the most popular stock in this table. On the other hand Sasol Limited (NYSE:SSL) is the least popular one with only 7 bullish hedge fund positions. Edison International (NYSE:EIX) 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 15 most popular stocks among hedge funds returned 19.7% through March 15th and outperformed the S&P 500 ETF (SPY) by 6.6 percentage points. Unfortunately EIX wasn't in this group. Hedge funds that bet on EIX were disappointed as the stock returned 12.6% and underperformed the market. If you are interested in investing in large cap stocks, you should check out the top 15 hedge fund stocks as 13 of these outperformed the market.
Disclosure: None. This article was originally published at Insider Monkey.