Is Pinnacle West Capital Corporation (PNW) Going to Burn These Hedge Funds?
Should Pinnacle West Capital Corporation (NYSE:PNW) investors track the following data?
If you were to ask many market players, hedge funds are viewed as bloated, old investment vehicles of an era lost to time. Although there are over 8,000 hedge funds trading in present day, Insider Monkey focuses on the moguls of this group, close to 525 funds. It is assumed that this group controls most of the smart money's total capital, and by tracking their highest performing equity investments, we've come up with a few investment strategies that have historically beaten Mr. Market. Our small-cap hedge fund strategy outperformed the S&P 500 index by 18 percentage points annually for a decade in our back tests, and since we've began to sharing our picks with our subscribers at the end of August 2012, we have outclassed the S&P 500 index by 33 percentage points in 11 months (find a sample of our picks).
Just as necessary, positive insider trading sentiment is another way to look at the world of equities. As the old adage goes: there are a variety of stimuli for a bullish insider to downsize shares of his or her company, but only one, very clear reason why they would initiate a purchase. Plenty of academic studies have demonstrated the market-beating potential of this tactic if shareholders know what to do (learn more here).
Now that that's out of the way, let's analyze the newest info about Pinnacle West Capital Corporation (NYSE:PNW).
How have hedgies been trading Pinnacle West Capital Corporation (NYSE:PNW)?
At Q2's end, a total of 19 of the hedge funds we track were bullish in this stock, a change of 27% from the previous quarter. With the smart money's positions undergoing their usual ebb and flow, there exists an "upper tier" of key hedge fund managers who were increasing their stakes considerably.
Out of the hedge funds we follow, David Harding's Winton Capital Management had the largest position in Pinnacle West Capital Corporation (NYSE:PNW), worth close to $58.8 million, comprising 0.7% of its total 13F portfolio. The second largest stake is held by Phill Gross and Robert Atchinson of Adage Capital Management, with a $42 million position; the fund has 0.1% of its 13F portfolio invested in the stock. Other hedgies that hold long positions include Cliff Asness's AQR Capital Management, Israel Englander's Millennium Management and Ken Griffin's Citadel Investment Group.
As aggregate interest spiked, particular hedge funds were breaking ground themselves. Winton Capital Management, managed by David Harding, established the biggest position in Pinnacle West Capital Corporation (NYSE:PNW). Winton Capital Management had 58.8 million invested in the company at the end of the quarter. Phill Gross and Robert Atchinson's Adage Capital Management also made a $42 million investment in the stock during the quarter. The other funds with brand new PNW positions are Cliff Asness's AQR Capital Management, Israel Englander's Millennium Management, and Ken Griffin's Citadel Investment Group.
What have insiders been doing with Pinnacle West Capital Corporation (NYSE:PNW)?
Insider buying is most useful when the company in question has seen transactions within the past 180 days. Over the latest six-month time frame, Pinnacle West Capital Corporation (NYSE:PNW) has experienced 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 Pinnacle West Capital Corporation (NYSE:PNW). These stocks are Brookfield Infrastructure Partners L.P. (NYSE:BIP), CMS Energy Corporation (NYSE:CMS), Alliant Energy Corporation (NYSE:LNT), OGE Energy Corp. (NYSE:OGE), and SCANA Corporation (NYSE:SCG). This group of stocks belong to the electric utilities industry and their market caps are closest to PNW's market cap.
# of Hedge Funds
# of Insiders Buying
# of Insiders Selling
Brookfield Infrastructure Partners L.P. (NYSE:BIP)
CMS Energy Corporation (NYSE:CMS)
Alliant Energy Corporation (NYSE:LNT)
OGE Energy Corp. (NYSE:OGE)
SCANA Corporation (NYSE:SCG)
Using the returns shown by Insider Monkey's tactics, average investors must always keep one eye on hedge fund and insider trading sentiment, and Pinnacle West Capital Corporation (NYSE:PNW) applies perfectly to this mantra.