The financial regulations require hedge funds and wealthy investors that exceeded the $100 million equity holdings threshold to file a report that shows their positions at the end of every quarter. Even though it isn't the intention, these filings to a certain extent level the playing field for ordinary investors. The latest round of 13F filings disclosed the funds' positions on March 31st, about a week after the S&P 500 Index bottomed. We at Insider Monkey have made an extensive database of more than 821 of those established hedge funds and famous value investors' filings. In this article, we analyze how these elite funds and prominent investors traded WEC Energy Group, Inc. (NYSE:WEC) based on those filings.
WEC Energy Group, Inc. (NYSE:WEC) shareholders have witnessed an increase in support from the world's most elite money managers recently. WEC was in 29 hedge funds' portfolios at the end of the first quarter of 2020. There were 15 hedge funds in our database with WEC holdings at the end of the previous quarter. Our calculations also showed that WEC isn't among the 30 most popular stocks among hedge funds (click for Q1 rankings and see the video for a quick look at the top 5 stocks). Video: 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 gauges shareholders can use to assess their stock investments. Some of the less utilized gauges are hedge fund and insider trading sentiment. Our researchers have shown that, historically, those who follow the top picks of the top investment managers can outclass the S&P 500 by a significant margin (see the details here).
[caption id="attachment_26794" align="aligncenter" width="400"] Paul Tudor Jones of Tudor Investment Corp[/caption]
At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, 2020’s unprecedented market conditions provide us with the highest number of trading opportunities in a decade. So we are checking out trades like this one as well as this tiny cannabis play. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. Our best call in 2020 was shorting the market when the S&P 500 was trading at 3150 after realizing the coronavirus pandemic’s significance before most investors. With all of this in mind let's take a look at the fresh hedge fund action regarding WEC Energy Group, Inc. (NYSE:WEC).
How have hedgies been trading WEC Energy Group, Inc. (NYSE:WEC)?
Heading into the second quarter of 2020, a total of 29 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 93% from the fourth quarter of 2019. The graph below displays the number of hedge funds with bullish position in WEC over the last 18 quarters. With hedgies' capital changing hands, there exists a select group of noteworthy hedge fund managers who were boosting their holdings significantly (or already accumulated large positions).
When looking at the institutional investors followed by Insider Monkey, Renaissance Technologies has the number one position in WEC Energy Group, Inc. (NYSE:WEC), worth close to $85.5 million, amounting to 0.1% of its total 13F portfolio. Coming in second is AQR Capital Management, led by Cliff Asness, holding a $71.3 million position; the fund has 0.1% of its 13F portfolio invested in the stock. Some other members of the smart money that are bullish consist of Israel Englander's Millennium Management, D. E. Shaw's D E Shaw and Stuart J. Zimmer's Zimmer Partners. In terms of the portfolio weights assigned to each position Blackstart Capital allocated the biggest weight to WEC Energy Group, Inc. (NYSE:WEC), around 4.43% of its 13F portfolio. Centenus Global Management is also relatively very bullish on the stock, setting aside 1.73 percent of its 13F equity portfolio to WEC.
As one would reasonably expect, key money managers were breaking ground themselves. Zimmer Partners, managed by Stuart J. Zimmer, initiated the largest position in WEC Energy Group, Inc. (NYSE:WEC). Zimmer Partners had $12 million invested in the company at the end of the quarter. Ryan Tolkin (CIO)'s Schonfeld Strategic Advisors also initiated a $6.4 million position during the quarter. The other funds with brand new WEC positions are Ken Griffin's Citadel Investment Group, Donald Sussman's Paloma Partners, and Dmitry Balyasny's Balyasny Asset Management.
Let's now take a look at hedge fund activity in other stocks - not necessarily in the same industry as WEC Energy Group, Inc. (NYSE:WEC) but similarly valued. These stocks are The Hershey Company (NYSE:HSY), Chunghwa Telecom Co., Ltd (NYSE:CHT), ICICI Bank Limited (NYSE:IBN), and Constellation Brands, Inc. (NYSE:STZ). This group of stocks' market caps resemble WEC's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position HSY,33,958331,-6 CHT,6,123577,2 IBN,24,378931,-5 STZ,50,1504770,-2 Average,28.25,741402,-2.75 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 28.25 hedge funds with bullish positions and the average amount invested in these stocks was $741 million. That figure was $267 million in WEC's case. Constellation Brands, Inc. (NYSE:STZ) is the most popular stock in this table. On the other hand Chunghwa Telecom Co., Ltd (NYSE:CHT) is the least popular one with only 6 bullish hedge fund positions. WEC Energy Group, Inc. (NYSE:WEC) 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 10 most popular stocks among hedge funds returned 41.4% in 2019 and outperformed the S&P 500 ETF (SPY) by 10.1 percentage points. These stocks gained 8.3% in 2020 through the end of May but beat the market by 13.2 percentage points. Unfortunately WEC wasn't nearly as popular as these 10 stocks and hedge funds that were betting on WEC were disappointed as the stock returned 4.9% during the same time period and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 10 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.