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Hedge Funds Are Warming Up To Edison International (EIX)

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The latest 13F reporting period has come and gone, and Insider Monkey is again at the forefront when it comes to making use of this gold mine of data. We at Insider Monkey have plowed through 866 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. In this article we look at what those investors think of Edison International (NYSE:EIX).

Edison International (NYSE:EIX) shareholders have witnessed an increase in hedge fund interest of late. Edison International (NYSE:EIX) was in 35 hedge funds' portfolios at the end of the first quarter of 2021. The all time high for this statistic is 37. Our calculations also showed that EIX isn't among the 30 most popular stocks among hedge funds (click for Q1 rankings).

According to most investors, hedge funds are assumed to be unimportant, outdated investment vehicles of years past. While there are greater than 8000 funds trading today, We hone in on the bigwigs of this group, around 850 funds. These money managers manage bulk of all hedge funds' total capital, and by shadowing their matchless equity investments, Insider Monkey has unsheathed a number of investment strategies that have historically outstripped the market. Insider Monkey's flagship short hedge fund strategy outpaced the S&P 500 short ETFs by around 20 percentage points a year since its inception in March 2017. Also, our monthly newsletter's portfolio of long stock picks returned 206.8% since March 2017 (through May 2021) and beat the S&P 500 Index by more than 115 percentage points. You can download a sample issue of this newsletter on our website .

Stuart Zimmer Zimmer Partners
Stuart Zimmer Zimmer Partners

Stuart Zimmer of Zimmer PartnersZimmer Partners

At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, lithium mining is one of the fastest growing industries right now, so we are checking out stock pitches like this emerging lithium stock. We go through lists like the 10 best battery stocks to pick the next Tesla that will deliver a 10x return. Even though we recommend positions in only a tiny fraction of the companies we analyze, we check out as many stocks as we can. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. You can subscribe to our free daily newsletter on our homepage. Now let's check out the latest hedge fund action regarding Edison International (NYSE:EIX).

Do Hedge Funds Think EIX Is A Good Stock To Buy Now?

Heading into the second quarter of 2021, a total of 35 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 17% from one quarter earlier. Below, you can check out the change in hedge fund sentiment towards EIX over the last 23 quarters. So, let's find out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

Among these funds, Pzena Investment Management held the most valuable stake in Edison International (NYSE:EIX), which was worth $778.6 million at the end of the fourth quarter. On the second spot was Zimmer Partners which amassed $443.3 million worth of shares. Citadel Investment Group, Adage Capital Management, and Millennium 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 Zimmer Partners allocated the biggest weight to Edison International (NYSE:EIX), around 6.02% of its 13F portfolio. Pzena Investment Management is also relatively very bullish on the stock, earmarking 3.16 percent of its 13F equity portfolio to EIX.

As aggregate interest increased, some big names were breaking ground themselves. Renaissance Technologies, created the most outsized position in Edison International (NYSE:EIX). Renaissance Technologies had $8.1 million invested in the company at the end of the quarter. Benjamin A. Smith's Laurion Capital Management also made a $7.5 million investment in the stock during the quarter. The other funds with new positions in the stock are Alec Litowitz and Ross Laser's Magnetar Capital, Ryan Tolkin (CIO)'s Schonfeld Strategic Advisors, and Peter Rathjens, Bruce Clarke and John Campbell's Arrowstreet Capital.

Let's go over hedge fund activity in other stocks - not necessarily in the same industry as Edison International (NYSE:EIX) but similarly valued. We will take a look at McCormick & Company, Incorporated (NYSE:MKC), PPL Corporation (NYSE:PPL), Equifax Inc. (NYSE:EFX), Cerner Corporation (NASDAQ:CERN), POSCO (NYSE:PKX), Splunk Inc (NASDAQ:SPLK), and Northern Trust Corporation (NASDAQ:NTRS). This group of stocks' market values resemble EIX's market value.

[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position MKC,35,1969760,-1 PPL,25,152408,4 EFX,37,2475296,1 CERN,40,1135093,6 PKX,12,157036,2 SPLK,41,934345,-6 NTRS,28,348449,-3 Average,31.1,1024627,0.4 [/table]

View table here if you experience formatting issues.

As you can see these stocks had an average of 31.1 hedge funds with bullish positions and the average amount invested in these stocks was $1025 million. That figure was $1564 million in EIX's case. Splunk Inc (NASDAQ:SPLK) is the most popular stock in this table. On the other hand POSCO (NYSE:PKX) is the least popular one with only 12 bullish hedge fund positions. Edison International (NYSE:EIX) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for EIX is 78. Stocks with higher number of hedge fund positions relative to other stocks as well as relative to their historical range receive a higher sentiment score. 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 5 most popular stocks among hedge funds returned 95.8% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 40 percentage points. These stocks gained 19.3% in 2021 through June 25th and beat the market again by 4.8 percentage points. Unfortunately EIX wasn't nearly as popular as these 5 stocks and hedge funds that were betting on EIX were disappointed as the stock returned -2.7% since the end of March (through 6/25) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 5 most popular stocks among hedge funds as many of these stocks already outperformed the market since 2019.

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