Korea Electric Power Corporation (ADR) (KEP): Hedge Funds Aren’t Crazy About It, Insider Sentiment Unchanged
Is Korea Electric Power Corporation (ADR) (NYSE:KEP) a buy?
If you were to ask many investors, hedge funds are viewed as bloated, outdated financial tools of a period lost to current times. Although there are In excess of 8,000 hedge funds with their doors open in present day, Insider Monkey aim at the leaders of this group, close to 525 funds. It is widely held that this group controls the lion's share of the hedge fund industry's total capital, and by paying attention to their highest quality equity investments, we've formulated a number of investment strategies that have historically outstripped the broader indices. Our small-cap hedge fund strategy outstripped the S&P 500 index by 18 percentage points per year for a decade in our back tests, and since we've started sharing our picks with our subscribers at the end of August 2012, we have outpaced the S&P 500 index by 33 percentage points in 11 months (find a sample of our picks).
Equally as crucial, bullish insider trading activity is another way to look at the marketplace. There are many stimuli for a bullish insider to cut shares of his or her company, but only one, very simple reason why they would initiate a purchase. Many academic studies have demonstrated the impressive potential of this strategy if "monkeys" understand what to do (learn more here).
Thus, let's study the recent info about Korea Electric Power Corporation (ADR) (NYSE:KEP).
What does the smart money think about Korea Electric Power Corporation (ADR) (NYSE:KEP)?
In preparation for the third quarter, a total of 8 of the hedge funds we track were long in this stock, a change of -11% from the first quarter. With hedge funds' capital changing hands, there exists an "upper tier" of noteworthy hedge fund managers who were increasing their holdings substantially.
According to our 13F database, Arrowstreet Capital, managed by Peter Rathjens, Bruce Clarke and John Campbell, holds the most valuable position in Korea Electric Power Corporation (ADR) (NYSE:KEP). Arrowstreet Capital has a $23.4 million position in the stock, comprising 0.2% of its 13F portfolio. On Arrowstreet Capital's heels is Citadel Investment Group, managed by Ken Griffin, which held a $4.1 million position; the fund has less than 0.1%% of its 13F portfolio invested in the stock. Remaining hedgies that hold long positions include William B. Gray's Orbis Investment Management, Jim Simons's Renaissance Technologies and Jane Mendillo's Harvard Management Co.
Due to the fact Korea Electric Power Corporation (ADR) (NYSE:KEP) has witnessed declining interest from upper-tier hedge fund managers, it's easy to see that there was a specific group of fund managers that decided to sell off their entire stakes at the end of the second quarter. It's worth mentioning that Jeffrey Vinik's Vinik Asset Management sold off the largest stake of the 450+ funds we monitor, comprising about $24 million in stock, and Matt McLennan of First Eagle Investment Management was right behind this move, as the fund dropped about $1 million worth. These transactions are interesting, as total hedge fund interest fell by 1 funds at the end of the second quarter.
Insider trading activity in Korea Electric Power Corporation (ADR) (NYSE:KEP)
Insider buying is best served when the company in focus has experienced transactions within the past 180 days. Over the last six-month time period, Korea Electric Power Corporation (ADR) (NYSE:KEP) has seen zero unique insiders buying, and zero insider sales (see the details of insider trades here).
We'll also examine the relationship between both of these indicators in other stocks similar to Korea Electric Power Corporation (ADR) (NYSE:KEP). These stocks are PG&E Corporation (NYSE:PCG), Edison International (NYSE:EIX), PPL Corporation (NYSE:PPL), Consolidated Edison, Inc. (NYSE:ED), and FirstEnergy Corp. (NYSE:FE). This group of stocks are the members of the electric utilities industry and their market caps are similar to KEP's market cap.
# of Hedge Funds
# of Insiders Buying
# of Insiders Selling
PG&E Corporation (NYSE:PCG)
Edison International (NYSE:EIX)
PPL Corporation (NYSE:PPL)
Consolidated Edison, Inc. (NYSE:ED)
FirstEnergy Corp. (NYSE:FE)
Using the returns demonstrated by the previously mentioned studies, regular investors should always keep one eye on hedge fund and insider trading activity, and Korea Electric Power Corporation (ADR) (NYSE:KEP) shareholders fit into this picture quite nicely.