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The latest 13F reporting period has come and gone, and Insider Monkey have plowed through 821 13F filings that hedge funds and well-known value investors are required to file by the SEC. The 13F filings show the funds' and investors' portfolio positions as of March 31st, a week after the market trough. Now, we are almost done with the second quarter. Investors decided to bet on the economic recovery and a stock market rebound. S&P 500 Index returned almost 20% this quarter. In this article you are going to find out whether hedge funds thoughtCompanhia Energetica Minas Gerais (NYSE:CIG) was a good investment heading into the second quarter and how the stock traded in comparison to the top hedge fund picks.
Is Companhia Energetica Minas Gerais (NYSE:CIG) a good investment today? The smart money was getting more optimistic. The number of long hedge fund positions moved up by 1 lately. Our calculations also showed that CIG 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). CIG was in 10 hedge funds' portfolios at the end of March. There were 9 hedge funds in our database with CIG positions at the end of the previous quarter.
Video: Watch our video about the top 5 most popular hedge fund stocks.
In the financial world there are a large number of tools investors have at their disposal to grade stocks. A pair of the most under-the-radar tools are hedge fund and insider trading indicators. We have shown that, historically, those who follow the top picks of the best fund managers can outperform the broader indices by a solid amount. Insider Monkey's monthly stock picks returned 101% since March 2017 and outperformed the S&P 500 ETFs by more than 58 percentage points. Our short strategy outperformed the S&P 500 short ETFs by 20 percentage points annually (see the details here). That's why we believe hedge fund sentiment is a useful indicator that investors should pay attention to.
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Richard S. Pzena of Pzena Investment Management[/caption]
At Insider Monkey we scour multiple sources to uncover the next great investment idea. There is a lot of volatility in the markets and this presents amazing investment opportunities from time to time. For example, this trader claims to deliver juiced up returns with one trade a week, so we are checking out his highest conviction idea. A second trader claims to score lucrative profits by utilizing a "weekend trading strategy", so we look into his strategy's picks. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. We recently recommended several stocks partly inspired by legendary Bill Miller's investor letter. Our best call in 2020 was shorting the market when the S&P 500 was trading at 3150 in February after realizing the coronavirus pandemic’s significance before most investors. Now we're going to take a look at the new hedge fund action encompassing Companhia Energetica Minas Gerais (NYSE:CIG).
How are hedge funds trading Companhia Energetica Minas Gerais (NYSE:CIG)?
Heading into the second quarter of 2020, a total of 10 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 11% from the previous quarter. By comparison, 9 hedge funds held shares or bullish call options in CIG a year ago. With hedge funds' capital changing hands, there exists an "upper tier" of notable hedge fund managers who were adding to their stakes meaningfully (or already accumulated large positions).
Among these funds, Arrowstreet Capital held the most valuable stake in Companhia Energetica Minas Gerais (NYSE:CIG), which was worth $5.2 million at the end of the third quarter. On the second spot was AQR Capital Management which amassed $5.2 million worth of shares. Covalis Capital, Renaissance Technologies, and Two Sigma Advisors 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 Covalis Capital allocated the biggest weight to Companhia Energetica Minas Gerais (NYSE:CIG), around 1.57% of its 13F portfolio. Arrowstreet Capital is also relatively very bullish on the stock, earmarking 0.01 percent of its 13F equity portfolio to CIG.
Now, some big names were breaking ground themselves. Covalis Capital, managed by Zilvinas Mecelis, assembled the biggest position in Companhia Energetica Minas Gerais (NYSE:CIG). Covalis Capital had $3.4 million invested in the company at the end of the quarter. Richard S. Pzena's Pzena Investment Management also initiated a $0.9 million position during the quarter. The other funds with brand new CIG positions are Greg Eisner's Engineers Gate Manager and Ryan Tolkin (CIO)'s Schonfeld Strategic Advisors.
Let's now review hedge fund activity in other stocks - not necessarily in the same industry as Companhia Energetica Minas Gerais (NYSE:CIG) but similarly valued. We will take a look at Corporate Office Properties Trust (NYSE:OFC), Manchester United PLC (NYSE:MANU), TreeHouse Foods Inc. (NYSE:THS), and Halozyme Therapeutics, Inc. (NASDAQ:HALO). All of these stocks' market caps match CIG's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position OFC,17,158054,-4 MANU,8,27822,-2 THS,28,225828,1 HALO,23,154300,-2 Average,19,141501,-1.75 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 19 hedge funds with bullish positions and the average amount invested in these stocks was $142 million. That figure was $20 million in CIG's case. TreeHouse Foods Inc. (NYSE:THS) is the most popular stock in this table. On the other hand Manchester United PLC (NYSE:MANU) is the least popular one with only 8 bullish hedge fund positions. Companhia Energetica Minas Gerais (NYSE:CIG) is not the least popular stock in this group but hedge fund interest is still below average. 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 12.3% in 2020 through June 30th but beat the market by 15.5 percentage points. A small number of hedge funds were also right about betting on CIG, though not to the same extent, as the stock returned 20.6% during the second quarter and outperformed the market.
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Disclosure: None. This article was originally published at Insider Monkey.