The latest 13F reporting period has come and gone, and Insider Monkey have plowed through 823 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 June 30th, when the S&P 500 Index was trading around the 3100 level. Since the end of March, investors decided to bet on the economic recovery and a stock market rebound. S&P 500 Index returned more than 50% since its bottom. In this article you are going to find out whether hedge funds thought WEC Energy Group, Inc. (NYSE:WEC) was a good investment heading into the third quarter and how the stock traded in comparison to the top hedge fund picks.
Is WEC Energy Group, Inc. (NYSE:WEC) worth your attention right now? The smart money was betting on the stock. The number of bullish hedge fund positions moved up by 1 lately. WEC Energy Group, Inc. (NYSE:WEC) was in 30 hedge funds' portfolios at the end of June. The all time high for this statistics is 29. This means the bullish number of hedge fund positions in this stock currently sits at its all time high. Our calculations also showed that WEC isn't among the 30 most popular stocks among hedge funds (click for Q2 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 several metrics investors have at their disposal to size up stocks. A couple of the most innovative metrics are hedge fund and insider trading activity. Our researchers have shown that, historically, those who follow the best picks of the best investment managers can outpace the market by a very impressive amount (see the details here).
Paul Tudor Jones of Tudor Investment Corp
At Insider Monkey we leave no stone unturned when looking for the next great investment idea. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. We go through lists like the 10 most profitable companies in the world to pick the best large-cap stocks to buy. Even though we recommend positions in only a tiny fraction of the companies we analyze, we check out as many stocks as we can. Keeping this in mind we're going to take a glance at the fresh hedge fund action encompassing WEC Energy Group, Inc. (NYSE:WEC).
How have hedgies been trading WEC Energy Group, Inc. (NYSE:WEC)?
Heading into the third quarter of 2020, a total of 30 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 3% from one quarter earlier. The graph below displays the number of hedge funds with bullish position in WEC over the last 20 quarters. So, let's check out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
Among these funds, Millennium Management held the most valuable stake in WEC Energy Group, Inc. (NYSE:WEC), which was worth $76.7 million at the end of the third quarter. On the second spot was AQR Capital Management which amassed $58.8 million worth of shares. D E Shaw, Echo Street Capital Management, and Renaissance Technologies 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 Brasada Capital Management allocated the biggest weight to WEC Energy Group, Inc. (NYSE:WEC), around 0.57% of its 13F portfolio. Echo Street Capital Management is also relatively very bullish on the stock, designating 0.42 percent of its 13F equity portfolio to WEC.
As aggregate interest increased, specific money managers were leading the bulls' herd. Echo Street Capital Management, managed by Greg Poole, initiated the most valuable position in WEC Energy Group, Inc. (NYSE:WEC). Echo Street Capital Management had $35.2 million invested in the company at the end of the quarter. Steve Cohen's Point72 Asset Management also initiated a $4.1 million position during the quarter. The other funds with brand new WEC positions are Benjamin A. Smith's Laurion Capital Management, Mark McMeans's Brasada Capital Management, and Paul Tudor Jones's Tudor Investment Corp.
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. These stocks are The Clorox Company (NYSE:CLX), Verisk Analytics, Inc. (NASDAQ:VRSK), IAC/InterActiveCorp (NASDAQ:IAC), Agilent Technologies Inc. (NYSE:A), Paychex, Inc. (NASDAQ:PAYX), IQVIA Holdings, Inc. (NYSE:IQV), and The Hershey Company (NYSE:HSY). All of these stocks' market caps are similar to WEC's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position CLX,36,1488687,-5 VRSK,36,981827,5 IAC,60,4955863,3 A,38,2815048,3 PAYX,36,877442,-5 IQV,66,3022562,6 HSY,39,1028323,6 Average,44.4,2167107,1.9 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 44.4 hedge funds with bullish positions and the average amount invested in these stocks was $2167 million. That figure was $291 million in WEC's case. IQVIA Holdings, Inc. (NYSE:IQV) is the most popular stock in this table. On the other hand The Clorox Company (NYSE:CLX) is the least popular one with only 36 bullish hedge fund positions. Compared to these stocks WEC Energy Group, Inc. (NYSE:WEC) is even less popular than CLX. Our overall hedge fund sentiment score for WEC is 26. 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. Hedge funds clearly dropped the ball on WEC as the stock delivered strong returns, though hedge funds' consensus picks still generated respectable returns. 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 23.8% in 2020 through September 14th and still beat the market by 17.6 percentage points. A small number of hedge funds were also right about betting on WEC as the stock returned 11.6% during the third quarter (through September 14th) and outperformed the market by an even larger margin.
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Disclosure: None. This article was originally published at Insider Monkey.