Is Exelon Corporation (EXC) a great equity investment?

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Heartland Advisors, an investment management firm, has released its third quarter 2021 “Heartland Mid Cap Value Fund” letter to investors – a copy of which can be found seen here. Stock selection was mixed, with holdings in real estate and financials pushing up, but the strategy lagged its benchmark Russell Mid Cap® Value Index for the period. Holdings in materials detracted from relative performance. The portfolio continued to exceed its base year until September 30. You can take a look at the top 5 holdings in the fund to get an idea of ​​their top picks for 2021.

Heartland Advisors, in its letter to investors for the third quarter of 2021, mentioned Exelon Corporation (NASDAQ: EXC) and discussed his position on the company. Exelon Corporation is a Chicago, Illinois-based nuclear power generation company with a market capitalization of $ 49.9 billion. EXC has achieved a 20.96% year-to-date return, while its 12-month returns are up 21.02%. The stock closed at $ 51.07 per share on October 21, 2021.

Here’s what Heartland Advisors has to say about Exelon Corporation in its Q3 2021 letter to investors:

Power help. A renewed interest in less volatile industries and income-generating businesses has helped propel less volatile names in areas such as utilities. Our positions in the sector increased slightly over the period and outperformed the benchmark on a relative basis, driven by Exelon Corp (EXC).

The company is a large, multi-state utility with regulated and unregulated operations. Following a strategic review, this year Exelon announced a plan to separate the two activities. Since the time of the announcement, investors have a clearer view of the prospects for both deals and have seen results improving, and stocks have appreciated. The decision and recent improvements, in our opinion, have paved the way for a new assessment of the company.

Based on our analysis, investors seem to underestimate Exelon’s two businesses in the current operating structure. We believe the regulated line has desirable transmission / distribution assets and strong opportunities for rate base growth. Meanwhile, the unregulated merchant power segment is trading at less than 5 times enterprise value / earnings before interest, taxes, depreciation and amortization, which is a steep discount from the average multiple of companies. electricity listed on the stock exchange.

We also believe that Exelon’s business activity, with its nuclear fleet and an inventory of alternative energy assets, is poised to benefit from the increased focus on clean energy by the Biden administration.

With stocks traded at a discount to our sum of the parts analysis, Exelon, in our view, remains an attractive opportunity compared to fully regulated utilities. “

15 largest government-owned utility companies in the United States

High voltage power lines. Electricity distribution station. high voltage electric transmission tower. Electrical distribution substation with power lines and transformers.

Based on our calculations, Exelon Corporation (NASDAQ: EXC) failed to secure a spot in our list of 30 most popular stocks among hedge funds. EXC was in 35 hedge fund portfolios at the end of the first half of 2021, compared to 44 funds in the previous quarter. Exelon Corporation (NASDAQ: EXC) generated a return of 9.78% in the last 3 months.

The reputation of hedge funds as savvy investors has been tarnished over the past decade, as their hedged returns could not keep up with the unhedged returns of stock indices. Our research has shown that small cap hedge fund stock selection managed to beat the market by double digits every year between 1999 and 2016, but the margin for outperformance has shrunk in recent years. Nonetheless, we were still able to identify in advance a select group of hedge funds that have outperformed S&P 500 ETFs by 115 percentage points since March 2017 (see details here). We were also able to identify in advance a select group of hedge funds that underperformed the market by 10 percentage points per year between 2006 and 2017. Interestingly, the margin of underperformance of these stocks has increased in recent years. Investors who are long in the market and short on these stocks would have reported more than 27% per year between 2015 and 2017. We have been tracking and sharing the list of these stocks since February 2017 in our quarterly newsletter.

At Insider Monkey, we scour multiple sources to uncover the next big investing idea. For example, lithium mining is one of the fastest growing industries right now, so we’re looking at stock locations like this. emerging lithium stocks. We go through lists like the 12 best EV stocks to choose the next Tesla which will offer a 10x return. Even though we only recommend positions in a tiny fraction of the companies we analyze, we check as many stocks as possible. We read letters from hedge fund investors and listen to equity pitches at hedge fund conferences. You can subscribe to our free daily newsletter at our home page.

Disclosure: none. This article was originally published on Monkey initiate.


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