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How Have Institutional Investors’ Views of Water Utilities Changed?

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Institutional investors and water utilities

As we discussed in previous parts of this series, water utilities have witnessed their most epic surge of the decade in 2016. Institutional investors, meanwhile, have gone in heavily on water utility stocks, which is likely one of the major reasons behind the rally in water utility stocks.

Specifically, institutional investors have marginally decreased their positions in American Water Works (AWK) since 2Q16. The percentage of float held in American Water by institutional investors has declined by ~0.5% as of August 12, 2016, as compared to June 30, 2016. (“Float” refers to the number of a company’s shares that are available for trading.)

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American Water Works’ float

For AWK, the number of buyers has increased by 5.6% lately, and the number of sellers also increased by 6.4%. But the number of new buyers declined by ~3%, while the number of sell-offs increased by 9%.

The percentage of float held by institutional investors in AWK has decreased from 92.3% at the end of 2Q16 to 91.9% as of August 14, 2016. Notably, BlackRock, Vanguard, and State Street are the top three institutions holding American Water Works.

Peer floats

By comparison, Aqua America’s (WTR) float held by institutional investors increased from 55.4% to 56.1% on August 14, 2016. New buyer stats indicate recent long position additions. For American States Water, institutional investors increased their holdings by nearly 1.5% in the last couple of months. The float held by them in AWR rose from 81.4% to 83.8% as of August 14, 2016.

For American States Water, institutional investors have increased their holdings by nearly 1.5% in the past couple of months. The float held by institutional investors in AWR has risen from 81.4% to 83.8% as of August 14, 2016.

It will be interesting to see the movement of water utility stocks going forward, because the sentiment of institutional investors toward water utilities (PIO) seems mixed. Fair yields and stable earnings growth appear to be keeping investors in safe-haven water utilities, but overvaluation remains a principal concern.

Now let’s examine technical indicators and the relative strength indexes of these companies.

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