After several tireless days we have finished crunching the numbers from nearly 817 13F filings issued by the elite hedge funds and other investment firms that we track at Insider Monkey, which disclosed those firms' equity portfolios as of September 30th. The results of that effort will be put on display in this article, as we share valuable insight into the smart money sentiment towards Clearway Energy, Inc. (NYSE:CWEN).
Is CWEN a good stock to buy now? Hedge fund interest in Clearway Energy, Inc. (NYSE:CWEN) shares was flat at the end of last quarter. This is usually a negative indicator. Our calculations also showed that CWEN isn't among the 30 most popular stocks among hedge funds (click for Q3 rankings and see the video for a quick look at the top 5 stocks). The level and the change in hedge fund popularity aren't the only variables you need to analyze to decipher hedge funds' perspectives. A stock may witness a boost in popularity but it may still be less popular than similarly priced stocks. That's why at the end of this article we will examine companies such as Yamana Gold Inc. (NYSE:AUY), Plug Power, Inc. (NASDAQ:PLUG), and SiteOne Landscape Supply, Inc. (NYSE:SITE) to gather more data points.
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 113% since March 2017 and outperformed the S&P 500 ETFs by more than 66 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.
Alex Litowitz Magnetar Capital
Alec Litowitz of Magnetar Capital
At Insider Monkey we scour multiple sources to uncover the next great investment idea. For example, Federal Reserve has been creating trillions of dollars electronically to keep the interest rates near zero. We believe this will lead to inflation and boost real estate prices. So, we recommended this real estate stock to our monthly premium newsletter subscribers. We go through lists like the 15 best blue chip stocks 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. 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 website. Keeping this in mind we're going to review the fresh hedge fund action regarding Clearway Energy, Inc. (NYSE:CWEN).
Do Hedge Funds Think CWEN Is A Good Stock To Buy Now?
At the end of the third quarter, a total of 19 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 0% from one quarter earlier. Below, you can check out the change in hedge fund sentiment towards CWEN over the last 21 quarters. With hedgies' positions undergoing their usual ebb and flow, there exists a select group of notable hedge fund managers who were upping their stakes considerably (or already accumulated large positions).
More specifically, Renaissance Technologies was the largest shareholder of Clearway Energy, Inc. (NYSE:CWEN), with a stake worth $81.9 million reported as of the end of September. Trailing Renaissance Technologies was Renaissance Technologies, which amassed a stake valued at $51 million. Southpoint Capital Advisors, Electron Capital Partners, and Mountaineer Partners 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 Mountaineer Partners Management allocated the biggest weight to Clearway Energy, Inc. (NYSE:CWEN), around 16.65% of its 13F portfolio. Alta Fundamental Advisers is also relatively very bullish on the stock, designating 14.51 percent of its 13F equity portfolio to CWEN.
Seeing as Clearway Energy, Inc. (NYSE:CWEN) has experienced a decline in interest from the smart money, it's safe to say that there is a sect of money managers that slashed their entire stakes heading into Q4. At the top of the heap, Bruce Kovner's Caxton Associates LP sold off the biggest position of the 750 funds monitored by Insider Monkey, worth about $5.5 million in stock. Till Bechtolsheimer's fund, Arosa Capital Management, also sold off its stock, about $2.3 million worth. These bearish behaviors are important to note, as total hedge fund interest stayed the same (this is a bearish signal in our experience).
Let's go over hedge fund activity in other stocks - not necessarily in the same industry as Clearway Energy, Inc. (NYSE:CWEN) but similarly valued. These stocks are Yamana Gold Inc. (NYSE:AUY), Plug Power, Inc. (NASDAQ:PLUG), SiteOne Landscape Supply, Inc. (NYSE:SITE), The AZEK Company Inc. (NYSE:AZEK), Corelogic Inc (NYSE:CLGX), BWX Technologies Inc (NYSE:BWXT), and Pearson PLC (NYSE:PSO). This group of stocks' market values match CWEN's market value.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position AUY,17,296964,-1 PLUG,21,389379,1 SITE,28,96129,10 AZEK,34,489399,8 CLGX,45,1712392,10 BWXT,21,166407,-6 PSO,5,16445,-2 Average,24.4,452445,2.9 [/table]
As you can see these stocks had an average of 24.4 hedge funds with bullish positions and the average amount invested in these stocks was $452 million. That figure was $256 million in CWEN's case. Corelogic Inc (NYSE:CLGX) is the most popular stock in this table. On the other hand Pearson PLC (NYSE:PSO) is the least popular one with only 5 bullish hedge fund positions. Clearway Energy, Inc. (NYSE:CWEN) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for CWEN is 43.6. 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. 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 percentage points. These stocks gained 30.7% in 2020 through December 14th and still beat the market by 15.8 percentage points. A small number of hedge funds were also right about betting on CWEN as the stock returned 14.4% since the end of the third quarter (through 12/14) and outperformed the market by an even larger margin.
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Disclosure: None. This article was originally published at Insider Monkey.
