We hate to say this but, we told you so. On February 27th we published an article with the title Recession is Imminent: We Need A Travel Ban NOW and predicted a US recession when the S&P 500 Index was trading at the 3150 level. We also told you to short the market and buy long-term Treasury bonds. Our article also called for a total international travel ban. While we were warning you, President Trump minimized the threat and failed to act promptly. As a result of his inaction, we will now experience a deeper recession.
In these volatile markets we scrutinize hedge fund filings to get a reading on which direction each stock might be going. Hedge Funds and other institutional investors have just completed filing their 13Fs with the Securities and Exchange Commission, revealing their equity portfolios as of the end of June. At Insider Monkey, we follow nearly 835 active hedge funds and notable investors and by analyzing their 13F filings, we can determine the stocks that they are collectively bullish on. One of their picks is WEC Energy Group, Inc. (NYSE:WEC), so let’s take a closer look at the sentiment that surrounds it in the current quarter.
WEC Energy Group, Inc. (NYSE:WEC) has seen a decrease in enthusiasm from smart money lately. Our calculations also showed that WEC isn't among the 30 most popular stocks among hedge funds (click for Q4 rankings and see the video below for Q3 rankings). Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.
In the financial world there are several indicators stock market investors put to use to appraise their holdings. A duo of the most useful indicators are hedge fund and insider trading signals. We have shown that, historically, those who follow the best picks of the top investment managers can trounce the market by a healthy margin (see the details here).
[caption id="attachment_189632" align="aligncenter" width="399"] David Harding of Winton Capital Management[/caption]
We leave no stone unturned when looking for the next great investment idea. For example we recently identified a stock that trades 25% below the net cash on its balance sheet. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences, and go through short-term trade recommendations like this one. We even check out the recommendations of services with hard to believe track records. Our best call in 2020 was shorting the market when S&P 500 was trading at 3150 after realizing the coronavirus pandemic's significance before most investors. Keeping this in mind let's take a gander at the key hedge fund action surrounding WEC Energy Group, Inc. (NYSE:WEC).
What does smart money think about WEC Energy Group, Inc. (NYSE:WEC)?
Heading into the first quarter of 2020, a total of 15 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -32% from the third quarter of 2019. Below, you can check out the change in hedge fund sentiment towards WEC over the last 18 quarters. So, let's see 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 WEC Energy Group, Inc. (NYSE:WEC), which was worth $87.2 million at the end of the third quarter. On the second spot was AQR Capital Management which amassed $75.1 million worth of shares. GLG Partners, D E Shaw, and Winton 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 Signition LP allocated the biggest weight to WEC Energy Group, Inc. (NYSE:WEC), around 3.05% of its 13F portfolio. CSat Investment Advisory is also relatively very bullish on the stock, dishing out 0.15 percent of its 13F equity portfolio to WEC.
Because WEC Energy Group, Inc. (NYSE:WEC) has witnessed a decline in interest from hedge fund managers, it's safe to say that there were a few hedgies that decided to sell off their entire stakes last quarter. Intriguingly, Dmitry Balyasny's Balyasny Asset Management sold off the largest position of the "upper crust" of funds monitored by Insider Monkey, comprising an estimated $13.6 million in stock, and Ken Griffin's Citadel Investment Group was right behind this move, as the fund cut about $8.9 million worth. These transactions are interesting, as aggregate hedge fund interest fell by 7 funds last quarter.
Let's check out hedge fund activity in other stocks - not necessarily in the same industry as WEC Energy Group, Inc. (NYSE:WEC) but similarly valued. We will take a look at Telefonaktiebolaget LM Ericsson (publ) (NASDAQ:ERIC), State Street Corporation (NYSE:STT), The Williams Companies, Inc. (NYSE:WMB), and China Unicom (Hong Kong) Limited (NYSE:CHU). This group of stocks' market values are similar to WEC's market value.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position ERIC,18,367933,-2 STT,45,1286711,8 WMB,40,958886,0 CHU,11,60557,3 Average,28.5,668522,2.25 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 28.5 hedge funds with bullish positions and the average amount invested in these stocks was $669 million. That figure was $212 million in WEC's case. State Street Corporation (NYSE:STT) is the most popular stock in this table. On the other hand China Unicom (Hong Kong) Limited (NYSE:CHU) is the least popular one with only 11 bullish hedge fund positions. WEC Energy Group, Inc. (NYSE:WEC) 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 41.3% in 2019 and outperformed the S&P 500 ETF (SPY) by 10.1 percentage points. These stocks lost 11.7% in 2020 through March 11th but still beat the market by 3.1 percentage points. A small number of hedge funds were also right about betting on WEC as the stock returned 6.3% during the same time period and outperformed the market by an even larger margin.
Disclosure: None. This article was originally published at Insider Monkey.