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What are the top new buy and sell ideas of hedge fund and mutual fund gurus in the electric utilities group? This article, the first in a new series, identifies the stocks in the group that were most bought and sold by the gurus. It does so through a research of the latest available institutional 13-F and 13-D/G (5% ownership) filings (as recent as just ten days old). It is a follow-up to my previous series that identified top guru holdings by Industry Group based on the December 2010 quarter SEC filings.

The savvy investor may consider leveraging this information either as a starting point to conduct his own due diligence or even go as far as constructing a model diversified portfolio based on the guru best picks. The argument is that institutional investors have the resources and the access to information, knowledge and expertise to conduct extensive due diligence in informing their investment decisions. When guru institutional investors invest and maybe even converge on a specific investment idea, by virtue of their fund performance, low volatility and elite reputation in the investment community, the idea merits consideration for further investigation.

The following is a list of the stocks most bought and sold by gurus during the quarter, and also their top holdings in the group. For details on the guru funds, please click on the hyperlink:

  • AES Corp. (NYSE:AES) is engaged in the generation and distribution of electricity to over 12 million customers worldwide. The net sell of $361 million included $295 million sold by Legg Mason Capital Management and $57 million sold by SAC Capital Advisors LP.

  • NRG Energy Inc. (NYSE:NRG) is engaged in the supply of electricity in Texas, generation of wholesale power, and trading of energy and capacity in the U.S. The net buy of $72 million included $77 million bought by Blue Ridge Capital Holdings LLC.

  • FirstEnergy Corp. (NYSE:FE) is a holding company engaged in the generation and distribution of electricity to 4.5 million customers in a 36,100 sq. mile area. The net sell of $42 million included a $26 million sold by First Eagle Investment Management LLC.

  • PPL Corporation (NYSE:PPL) is a holding company engaged in electricity generation, marketing and distribution in Northeastern and Northwestern U.S. The net buy of $34 million included $28 million bought by SAC Capital Advisors LLP.

  • American Electric Power (NYSE:AEP) is engaged in the generation, transmission and distribution of electricity in AR, IN, KY, LA, MI, OH, TN, TX, WV, and VA. The net buy of $39 million included $26 million bought by SAC Capital Advisors LLP.

  • IdaCorp Inc. Holding Co. (NYSE:IDA) is engaged in the generation and distribution of electric power to 490,000 customers in southern Idaho and eastern Oregon. Guru funds cumulatively own $236 million or 12.3% of the outstanding shares, with First Eagle Investment Management LLC owning the largest share at $180 million.

  • Genon Energy Inc. (GEN) provides electricity and energy services to wholesale energy markets in the U.S. Guru funds cumulatively own $163 million or 5.5% of the outstanding shares, with Donald Smith & Co. owning $99 million and Schneider Capital Management Corp. owning $45 million worth of stock.

Table

Company

Ticker

Net Buy or Sell

Market Value of Guru Holdings

Guru New Buy and Sells

Top Net Buys and Sells

AES Corp.

AES

Sell

$402 million

$361 million

NRG Energy Inc.

NRG

Buy

$161 million

$72 million

FirstEnergy Corp.

FE

Sell

$455 million

$42 million

PPL Corp.

PPL

Buy

$44 million

$34 million

American Electric Power Inc.

AEP

Buy

$39 million

$34 million

Top Holdings

IdaCorp Inc.

IDA

Buy

$236 million

$9 million

Genon Energy Inc.

GEN

Buy

$163 million

$22 million

Summary:

The best new picks of Hedge Fund and Mutual Fund Gurus in the Electric Utilities Group are NRG Energy (NRG), PPL Corporation (PPL) and American Electric Power (AEP). Their best sell ideas in the group are AES Corp (AES) and FirstEnergy Corp. (FE).


Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.

Credit: Historical fundamentals, including operating metrics and stock ownership information were derived using I-Metrix® by Edgar Online®, Zacks Investment Research, DailyGraphs®, Thomson Reuters and Briefing.com. Fund data, including assets under management and firm profiles are sourced mostly from Hedgetracker.com. The information and data are believed to be accurate, but no guarantees or representations are made.

Disclaimer: Material presented here is for informational purposes only. Nothing in this article should be taken as a solicitation to purchase or sell securities. Before buying or selling any stock you should do your own research and reach your own conclusion. Further, these are my opinions and I may be wrong. I may have positions in securities mentioned in this article. You should take this into consideration before acting on any advice given in this article.

Source: Top Electric Securities Picks by Fund Gurus Concentrated in the Sector