Is Atlantic Power Corporation (NYSE:AT) a good place to invest some of your money right now? We can gain invaluable insight to help us answer that question by studying the investment trends of top investors, who employ world-class Ivy League graduates, who are given immense resources and industry contacts to put their financial expertise to work. The top picks of these firms have historically outperformed the market when we account for known risk factors, making them very valuable investment ideas.
Atlantic Power Corporation (NYSE:AT) shares haven't seen a lot of action during the third quarter. Overall, hedge fund sentiment was unchanged. The stock was in 12 hedge funds' portfolios at the end of the third quarter of 2019. The level and the change in hedge fund popularity aren't the only variables you need to analyze to decipher hedge funds' perspectives. A stock may witness a boost in popularity but it may still be less popular than similarly priced stocks. That's why at the end of this article we will examine companies such as Cincinnati Bell Inc. (NYSE:CBB), On Deck Capital Inc (NYSE:ONDK), and Global Water Resources, Inc. (NASDAQ:GWRS) to gather more data points. Our calculations also showed that AT 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.
At the moment there are plenty of signals investors employ to assess stocks. A pair of the best signals are hedge fund and insider trading signals. Our experts have shown that, historically, those who follow the best picks of the top fund managers can beat the market by a superb amount (see the details here).
[caption id="attachment_364880" align="aligncenter" width="499"] Nathaniel August of Mangrove Partners[/caption]
We leave no stone unturned when looking for the next great investment idea. For example Europe is set to become the world's largest cannabis market, so we check out this European marijuana stock pitch. One of the most bullish analysts in America just put his money where his mouth is. He says, "I'm investing more today than I did back in early 2009." So we check out his pitch. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. We also rely on the best performing hedge funds' buy/sell signals. Let's take a gander at the new hedge fund action encompassing Atlantic Power Corporation (NYSE:AT).
How have hedgies been trading Atlantic Power Corporation (NYSE:AT)?
At the end of the third quarter, a total of 12 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 0% from one quarter earlier. The graph below displays the number of hedge funds with bullish position in AT over the last 17 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.
Of the funds tracked by Insider Monkey, Nathaniel August's Mangrove Partners has the biggest position in Atlantic Power Corporation (NYSE:AT), worth close to $17.7 million, accounting for 2.1% of its total 13F portfolio. Coming in second is Peter Rathjens, Bruce Clarke and John Campbell of Arrowstreet Capital, with a $3 million position; less than 0.1%% of its 13F portfolio is allocated to the stock. Some other members of the smart money that hold long positions contain David E. Shaw's D E Shaw, Noam Gottesman's GLG Partners and Renaissance Technologies. In terms of the portfolio weights assigned to each position Mangrove Partners allocated the biggest weight to Atlantic Power Corporation (NYSE:AT), around 2.15% of its 13F portfolio. Bailard Inc is also relatively very bullish on the stock, dishing out 0.01 percent of its 13F equity portfolio to AT.
Earlier we told you that the aggregate hedge fund interest in the stock was unchanged and we view this as a negative development. Even though there weren't any hedge funds dumping their holdings during the third quarter, there weren't any hedge funds initiating brand new positions. This indicates that hedge funds, at the very best, perceive this stock as dead money and they haven't identified any viable catalysts that can attract investor attention.
Let's now take a look at hedge fund activity in other stocks - not necessarily in the same industry as Atlantic Power Corporation (NYSE:AT) but similarly valued. These stocks are Cincinnati Bell Inc. (NYSE:CBB), On Deck Capital Inc (NYSE:ONDK), Global Water Resources, Inc. (NASDAQ:GWRS), and Briggs & Stratton Corporation (NYSE:BGG). This group of stocks' market valuations are closest to AT's market valuation.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position CBB,13,23380,2 ONDK,14,80339,-4 GWRS,4,10150,-1 BGG,10,13142,-1 Average,10.25,31753,-1 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 10.25 hedge funds with bullish positions and the average amount invested in these stocks was $32 million. That figure was $28 million in AT's case. On Deck Capital Inc (NYSE:ONDK) is the most popular stock in this table. On the other hand Global Water Resources, Inc. (NASDAQ:GWRS) is the least popular one with only 4 bullish hedge fund positions. Atlantic Power Corporation (NYSE:AT) 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 37.4% in 2019 through the end of November and outperformed the S&P 500 ETF (SPY) by 9.9 percentage points. Unfortunately AT wasn't nearly as popular as these 20 stocks and hedge funds that were betting on AT were disappointed as the stock returned 0.9% during the fourth quarter (through the end of November) 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.