Is The AES Corporation (AES) an Attractive Investment?
Massif Capital, an investment management company, released its “Massif Capital Real Assets Strategy” third-quarter 2022 investor letter. A copy of the same can be downloaded here. In the third quarter, the strategy returned -2.9% net of fees and delivered a -4.7% return year to date. The long position of the portfolio fell below 4% in the quarter, while its short position generated more than 1% profit. In addition, you can check the top 5 holdings of the fund to know its best picks in 2022.
Massif Capital discussed stocks like The AES Corporation (NYSE:AES) in the Q3 2022 investor letter. Headquartered in Arlington, Virginia, The AES Corporation (NYSE:AES) is a power generation and utility company. On October 25, 2022, The AES Corporation (NYSE:AES) stock closed at $25.19 per share. One-month return of The AES Corporation (NYSE:AES) was 13.26% and its shares lost 0.71% of their value over the last 52 weeks. The AES Corporation (NYSE:AES) has a market capitalization of $16.825 billion.
Massif Capital made the following comment about The AES Corporation (NYSE:AES) in its Q3 2022 investor letter:
"Roughly 11% of the portfolio is allocated to U.S. utility The AES Corporation (NYSE:AES) and Canadian independent power producer Polaris Renewable Energy. Both positions have had modest performance this year. Polaris has been more volatile than is justified by the underlying business, putting in an all-time high this year at the beginning of August before tumbling 30.0%. AES has been far more stable and traded in a tighter range but is also down for the year by 5.4%, inclusive of reinvesting the dividends into treasury bills.
AES has continued to build its robust pipeline of energy projects and its strong backlog of signed power purchase agreements (PPAs). Currently, AES has 3.8 GW of renewables with signed PPAs under construction, 6.7 GW of signed PPAs for which building has yet to start, and a total development pipeline of 59 GW as of the start of 2022. Of note is that energy storage projects now make up 18% of that pipeline, with roughly 50% of PPA's including some storage component.
AES continues to lag some of its peers on a multiple basis, which offers the opportunity for relative and absolute outperformance but raises questions about what the market may be concerned by. Solar supply chain issues are the best explanation for short-term underperformance, but on a two-year basis, AES trades at a roughly 30% discount to peers as measured by P/E and a 27% discount measured on an EV/EBIT basis. Balance sheet concerns may drive the discount, but AES has enjoyed several years of steady credit improvement and notched investment grade ratings across the board in the last 24 months. Still, forward-looking leverage levels remain elevated relative to peers. This may be the wedge keeping a lid on relative performance...” (Click here to read the full text)
The AES Corporation (NYSE:AES) is not on our list of 30 Most Popular Stocks Among Hedge Funds. As per our database, 37 hedge fund portfolios held The AES Corporation (NYSE:AES) at the end of the second quarter which was 37 in the previous quarter.
We discussed The AES Corporation (NYSE:AES) in another article and shared ClearBridge Investments' views on the company. In addition, please check out our hedge fund investor letters Q3 2022 page for more investor letters from hedge funds and other leading investors.
Disclosure: None. This article is originally published at Insider Monkey.