After several tireless days we have finished crunching the numbers from nearly 750 13F filings issued by the elite hedge funds and other investment firms that we track at Insider Monkey, which disclosed those firms' equity portfolios as of September 30th. The results of that effort will be put on display in this article, as we share valuable insight into the smart money sentiment towards PNM Resources, Inc. (NYSE:PNM).
PNM Resources, Inc. (NYSE:PNM) investors should be aware of an increase in hedge fund sentiment of late. Our calculations also showed that PNM 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.
To most traders, hedge funds are seen as unimportant, outdated financial vehicles of years past. While there are more than 8000 funds trading today, Our experts look at the leaders of this club, approximately 750 funds. These investment experts handle most of all hedge funds' total asset base, and by following their inimitable picks, Insider Monkey has come up with various investment strategies that have historically outrun the broader indices. Insider Monkey's flagship short hedge fund strategy surpassed the S&P 500 short ETFs by around 20 percentage points per annum since its inception in May 2014. Our portfolio of short stocks lost 27.8% since February 2017 (through November 21st) even though the market was up more than 39% during the same period. We just shared a list of 7 short targets in our latest quarterly update .
[caption id="attachment_340081" align="aligncenter" width="450"] Phill Gross of Adage Capital Management[/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 review the fresh hedge fund action regarding PNM Resources, Inc. (NYSE:PNM).
How are hedge funds trading PNM Resources, Inc. (NYSE:PNM)?
Heading into the fourth quarter of 2019, a total of 14 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 8% from the second quarter of 2019. By comparison, 19 hedge funds held shares or bullish call options in PNM a year ago. So, let's examine which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
Among these funds, Renaissance Technologies held the most valuable stake in PNM Resources, Inc. (NYSE:PNM), which was worth $138.3 million at the end of the third quarter. On the second spot was GAMCO Investors which amassed $98.4 million worth of shares. AQR Capital Management, Citadel Investment Group, 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 GAMCO Investors allocated the biggest weight to PNM Resources, Inc. (NYSE:PNM), around 0.82% of its 13F portfolio. ExodusPoint Capital is also relatively very bullish on the stock, dishing out 0.66 percent of its 13F equity portfolio to PNM.
With a general bullishness amongst the heavyweights, key money managers were leading the bulls' herd. Adage Capital Management, managed by Phill Gross and Robert Atchinson, initiated the biggest position in PNM Resources, Inc. (NYSE:PNM). Adage Capital Management had $31.2 million invested in the company at the end of the quarter. Stuart J. Zimmer's Zimmer Partners also initiated a $23.4 million position during the quarter. The other funds with brand new PNM positions are Peter Rathjens, Bruce Clarke and John Campbell's Arrowstreet Capital and Mike Vranos's Ellington.
Let's go over hedge fund activity in other stocks - not necessarily in the same industry as PNM Resources, Inc. (NYSE:PNM) but similarly valued. We will take a look at The Brink's Company (NYSE:BCO), Valvoline Inc. (NYSE:VVV), EnLink Midstream LLC (NYSE:ENLC), and RBC Bearings Incorporated (NASDAQ:ROLL). All of these stocks' market caps are closest to PNM's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position BCO,20,515286,-7 VVV,26,333444,4 ENLC,12,38220,0 ROLL,7,61593,1 Average,16.25,237136,-0.5 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 16.25 hedge funds with bullish positions and the average amount invested in these stocks was $237 million. That figure was $413 million in PNM's case. Valvoline Inc. (NYSE:VVV) is the most popular stock in this table. On the other hand RBC Bearings Incorporated (NASDAQ:ROLL) is the least popular one with only 7 bullish hedge fund positions. PNM Resources, Inc. (NYSE:PNM) is not the least popular stock in this group but hedge fund interest is still below average. This is a slightly negative signal and 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 PNM wasn't nearly as popular as these 20 stocks (hedge fund sentiment was quite bearish); PNM investors were disappointed as the stock returned -6.4% during the first two months of the fourth 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 70 percent of these stocks already outperformed the market in Q4.
Disclosure: None. This article was originally published at Insider Monkey.