The Insider Monkey team has completed processing the quarterly 13F filings for the June quarter submitted by the hedge funds and other money managers included in our extensive database. Most hedge fund investors experienced strong gains on the back of a strong market performance, which certainly propelled them to adjust their equity holdings so as to maintain the desired risk profile. As a result, the relevancy of these public filings and their content is indisputable, as they may reveal numerous high-potential stocks. The following article will discuss the smart money sentiment towards American Electric Power Company, Inc. (NASDAQ:AEP).
Is American Electric Power Company, Inc. (NASDAQ:AEP) a superb investment today? Prominent investors were in a bearish mood. The number of long hedge fund bets shrunk by 3 in recent months. American Electric Power Company, Inc. (NASDAQ:AEP) was in 29 hedge funds' portfolios at the end of June. The all time high for this statistic is 38. Our calculations also showed that AEP isn't among the 30 most popular stocks among hedge funds (click for Q2 rankings). There were 32 hedge funds in our database with AEP positions at the end of the first quarter.
At the moment there are a lot of indicators stock traders use to size up stocks. A duo of the less known indicators are hedge fund and insider trading interest. Our researchers have shown that, historically, those who follow the top picks of the best hedge fund managers can outperform their index-focused peers by a superb amount (see the details here). Also, our monthly newsletter's portfolio of long stock picks returned 185.4% since March 2017 (through August 2021) and beat the S&P 500 Index by more than 79 percentage points. You can download a sample issue of this newsletter on our website.
Michael Platt of BlueCrest Capital Mgmt.
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 EV 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. Keeping this in mind let's go over the latest hedge fund action encompassing American Electric Power Company, Inc. (NASDAQ:AEP).
Do Hedge Funds Think AEP Is A Good Stock To Buy Now?
At Q2's end, a total of 29 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -9% from one quarter earlier. The graph below displays the number of hedge funds with bullish position in AEP over the last 24 quarters. With hedge funds' positions undergoing their usual ebb and flow, there exists an "upper tier" of key hedge fund managers who were adding to their stakes significantly (or already accumulated large positions).
Among these funds, Zimmer Partners held the most valuable stake in American Electric Power Company, Inc. (NASDAQ:AEP), which was worth $112.3 million at the end of the second quarter. On the second spot was Renaissance Technologies which amassed $92.1 million worth of shares. Millennium Management, Citadel Investment Group, and Point72 Asset 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 Coann Capital allocated the biggest weight to American Electric Power Company, Inc. (NASDAQ:AEP), around 7.86% of its 13F portfolio. Zimmer Partners is also relatively very bullish on the stock, designating 1.51 percent of its 13F equity portfolio to AEP.
Because American Electric Power Company, Inc. (NASDAQ:AEP) has faced declining sentiment from the entirety of the hedge funds we track, we can see that there lies a certain "tier" of hedgies that slashed their full holdings in the second quarter. At the top of the heap, D. E. Shaw's D E Shaw dumped the biggest position of all the hedgies followed by Insider Monkey, totaling an estimated $19.6 million in stock, and Michael Platt and William Reeves's BlueCrest Capital Mgmt. was right behind this move, as the fund sold off about $13.5 million worth. These bearish behaviors are interesting, as aggregate hedge fund interest fell by 3 funds in the second quarter.
Let's also examine hedge fund activity in other stocks - not necessarily in the same industry as American Electric Power Company, Inc. (NASDAQ:AEP) but similarly valued. These stocks are Carrier Global Corporation (NYSE:CARR), Synopsys, Inc. (NASDAQ:SNPS), Telefonaktiebolaget LM Ericsson (publ) (NASDAQ:ERIC), Banco Bilbao Vizcaya Argentaria SA (NYSE:BBVA), DexCom, Inc. (NASDAQ:DXCM), Kinder Morgan Inc (NYSE:KMI), and DuPont de Nemours Inc (NYSE:DD). All of these stocks' market caps match AEP's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position CARR,46,1853633,-5 SNPS,41,2057258,7 ERIC,19,228837,0 BBVA,9,274525,2 DXCM,49,1634192,-7 KMI,38,1032764,0 DD,57,1653192,8 Average,37,1247772,0.7 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 37 hedge funds with bullish positions and the average amount invested in these stocks was $1248 million. That figure was $726 million in AEP's case. DuPont de Nemours Inc (NYSE:DD) is the most popular stock in this table. On the other hand Banco Bilbao Vizcaya Argentaria SA (NYSE:BBVA) is the least popular one with only 9 bullish hedge fund positions. American Electric Power Company, Inc. (NASDAQ:AEP) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for AEP is 45.7. 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 negative signal and 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 24.9% in 2021 through October 15th and surpassed the market again by 4.5 percentage points. Unfortunately AEP wasn't nearly as popular as these 5 stocks (hedge fund sentiment was quite bearish); AEP investors were disappointed as the stock returned -0.5% since the end of June (through 10/15) 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 most of these stocks already outperformed the market in 2021.
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Disclosure: None. This article was originally published at Insider Monkey.