Is Clearway Energy, Inc. (CWEN) Going to Burn These Hedge Funds?

·6 min read

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 873 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. In this article we look at what those investors think of Clearway Energy, Inc. (NYSE:CWEN).

Clearway Energy, Inc. (NYSE:CWEN) was in 21 hedge funds' portfolios at the end of June. The all time high for this statistic is 27. CWEN investors should pay attention to a decrease in support from the world's most elite money managers recently. There were 24 hedge funds in our database with CWEN positions at the end of the first quarter. Our calculations also showed that CWEN isn't among the 30 most popular stocks among hedge funds (click for Q2 rankings).

Hedge funds' reputation as shrewd investors has been tarnished in the last decade as their hedged returns couldn't keep up with the unhedged returns of the market indices. Hedge funds have more than $3.5 trillion in assets under management, so you can't expect their entire portfolios to beat the market by large margins. Our research was able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by more than 79 percentage points since March 2017 (see the details here). So you can still find a lot of gems by following hedge funds' moves today.

Izzy Englander of MILLENNIUM MANAGEMENT
Izzy Englander of MILLENNIUM MANAGEMENT

Israel Englander of Millennium Management

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. With all of this in mind we're going to go over the key hedge fund action surrounding Clearway Energy, Inc. (NYSE:CWEN).

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

At Q2's end, a total of 21 of the hedge funds tracked by Insider Monkey were long this stock, a change of -13% from one quarter earlier. Below, you can check out the change in hedge fund sentiment towards CWEN over the last 24 quarters. With hedgies' positions undergoing their usual ebb and flow, there exists an "upper tier" of notable hedge fund managers who were boosting their holdings substantially (or already accumulated large positions).

Is CWEN A Good Stock To Buy?
Is CWEN A Good Stock To Buy?

When looking at the institutional investors followed by Insider Monkey, Renaissance Technologies has the number one position in Clearway Energy, Inc. (NYSE:CWEN), worth close to $36.2 million, comprising less than 0.1%% of its total 13F portfolio. On Renaissance Technologies's heels is Renaissance Technologies, which holds a $35 million position; less than 0.1%% of its 13F portfolio is allocated to the company. Remaining members of the smart money that are bullish encompass John Smith Clark's Southpoint Capital Advisors, Jos Shaver's Electron Capital Partners and Israel Englander's Millennium Management. In terms of the portfolio weights assigned to each position Mountaineer Partners Management allocated the biggest weight to Clearway Energy, Inc. (NYSE:CWEN), around 5.67% of its 13F portfolio. Alta Fundamental Advisers is also relatively very bullish on the stock, earmarking 4.18 percent of its 13F equity portfolio to CWEN.

Since Clearway Energy, Inc. (NYSE:CWEN) has experienced declining sentiment from the aggregate hedge fund industry, logic holds that there lies a certain "tier" of hedge funds that slashed their full holdings in the second quarter. At the top of the heap, Paul Marshall and Ian Wace's Marshall Wace LLP dropped the largest stake of all the hedgies tracked by Insider Monkey, valued at an estimated $4.5 million in stock. Michael Gelband's fund, ExodusPoint Capital, also dropped its stock, about $2 million worth. These transactions are interesting, as aggregate hedge fund interest fell by 3 funds in the second quarter.

Let's check out hedge fund activity in other stocks - not necessarily in the same industry as Clearway Energy, Inc. (NYSE:CWEN) but similarly valued. We will take a look at Welbilt, Inc. (NYSE:WBT), AAON, Inc. (NASDAQ:AAON), Insmed Incorporated (NASDAQ:INSM), Cerevel Therapeutics Holdings, Inc. (NASDAQ:CERE), Vishay Intertechnology (NYSE:VSH), PROG Holdings Inc (NYSE:PRG), and Casella Waste Systems Inc. (NASDAQ:CWST). All of these stocks' market caps are closest to CWEN's market cap.

[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position WBT,44,984182,16 AAON,17,42863,1 INSM,22,568387,0 CERE,19,358524,-3 VSH,29,500383,-3 PRG,37,422619,3 CWST,26,115419,6 Average,27.7,427482,2.9 [/table]

View table here if you experience formatting issues.

As you can see these stocks had an average of 27.7 hedge funds with bullish positions and the average amount invested in these stocks was $427 million. That figure was $188 million in CWEN's case. Welbilt, Inc. (NYSE:WBT) is the most popular stock in this table. On the other hand AAON, Inc. (NASDAQ:AAON) is the least popular one with only 17 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 32.7. 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. 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% in 2021 through October 22nd and still beat the market by 1.6 percentage points. A small number of hedge funds were also right about betting on CWEN as the stock returned 22.7% since the end of the second quarter (through 10/22) and outperformed the market by an even larger margin.

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

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