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Here’s What Hedge Funds Think About Aqua America Inc (WTR)

Nina Todic

As we already know from media reports and hedge fund investor letters, many hedge funds lost money in fourth quarter, blaming macroeconomic conditions and unpredictable events that hit several sectors, with technology among them. Nevertheless, most investors decided to stick to their bullish theses and their long-term focus allows us to profit from the recent declines. In particular, let’s take a look at what hedge funds think about Aqua America Inc (NYSE:WTR) in this article.

Aqua America Inc (NYSE:WTR) has seen an increase in hedge fund interest in recent months. WTR was in 19 hedge funds' portfolios at the end of December. There were 13 hedge funds in our database with WTR positions at the end of the previous quarter. Our calculations also showed that WTR isn't among the 30 most popular stocks among hedge funds.

In the eyes of most market participants, hedge funds are assumed to be worthless, old investment vehicles of yesteryear. While there are over 8000 funds trading at present, We choose to focus on the upper echelon of this group, approximately 750 funds. Most estimates calculate that this group of people manage the lion's share of the smart money's total capital, and by keeping track of their finest picks, Insider Monkey has found numerous investment strategies that have historically outrun Mr. Market. Insider Monkey's flagship hedge fund strategy outpaced the S&P 500 index by nearly 5 percentage points per annum since its inception in May 2014 through early November 2018. We were able to generate large returns even by identifying short candidates. Our portfolio of short stocks lost 27.5% since February 2017 (through March 12th) even though the market was up nearly 25% during the same period. We just shared a list of 6 short targets in our latest quarterly update and they are already down an average of 6% in less than a month.

Clint Carlson, Carlson Capital

We're going to take a peek at the new hedge fund action surrounding Aqua America Inc (NYSE:WTR).

How are hedge funds trading Aqua America Inc (NYSE:WTR)?

At Q4's end, a total of 19 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 46% from the second quarter of 2018. On the other hand, there were a total of 10 hedge funds with a bullish position in WTR a year ago. With hedge funds' sentiment swirling, there exists a few notable hedge fund managers who were increasing their holdings considerably (or already accumulated large positions).

WRT

When looking at the institutional investors followed by Insider Monkey, Ian Simm's Impax Asset Management has the biggest position in Aqua America Inc (NYSE:WTR), worth close to $92.1 million, amounting to 1.5% of its total 13F portfolio. On Impax Asset Management's heels is Royce & Associates, managed by Chuck Royce, which holds a $15.7 million position; the fund has 0.1% of its 13F portfolio invested in the stock. Other hedge funds and institutional investors with similar optimism encompass Clint Carlson's Carlson Capital, Jim Simons's Renaissance Technologies and Cliff Asness's AQR Capital Management.

As industrywide interest jumped, some big names were leading the bulls' herd. Carlson Capital, managed by Clint Carlson, assembled the most outsized position in Aqua America Inc (NYSE:WTR). Carlson Capital had $11.7 million invested in the company at the end of the quarter. Jonathan Barrett and Paul Segal's Luminus Management also initiated a $8.3 million position during the quarter. The other funds with brand new WTR positions are Paul Marshall and Ian Wace's Marshall Wace LLP, Peter Rathjens, Bruce Clarke and John Campbell's Arrowstreet Capital, and Michael Platt and William Reeves's BlueCrest Capital Mgmt..

Let's also examine hedge fund activity in other stocks - not necessarily in the same industry as Aqua America Inc (NYSE:WTR) but similarly valued. We will take a look at WGP Group (NYSE:WGP), IPG Photonics Corporation (NASDAQ:IPGP), WEX Inc (NYSE:WEX), and EQT GP Holdings LP (NYSE:EQGP). All of these stocks' market caps are similar to WTR's market cap.

[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position WGP,7,66283,2 IPGP,16,131444,0 WEX,32,341616,4 EQGP,3,2149,-2 Average,14.5,135373,1 [/table]

View table here if you experience formatting issues.

As you can see these stocks had an average of 14.5 hedge funds with bullish positions and the average amount invested in these stocks was $135 million. That figure was $173 million in WTR's case. WEX Inc (NYSE:WEX) is the most popular stock in this table. On the other hand EQT GP Holdings LP (NYSE:EQGP) is the least popular one with only 3 bullish hedge fund positions. Aqua America Inc (NYSE:WTR) 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 21.3% through April 8th and outperformed the S&P 500 ETF (SPY) by more than 5 percentage points. Unfortunately WTR wasn't in this group. Hedge funds that bet on WTR were disappointed as the stock returned 6.9% 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 12 of these outperformed the market.

Disclosure: None. This article was originally published at Insider Monkey.

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