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Is Constellation Energy Corporation (CEG) an example of a “Deep Value” holding company?


Heartland Advisors, an investment management firm, has released its Q3 2022 “Heartland Mid Cap Value Fund” Investor Letter. A copy of it can be downloaded here. In the third quarter, the Investor Mid Cap category returned -5.06% and the Institutional Mid Cap category returned -5.03%, compared to a return of -4.93 % for the Russell Midcap Value Index. Initially, in the third quarter, the fund lagged its benchmark, the Russell Mid Cap Value Index. But by the end of the third quarter, the fund was able to close the gap to the benchmark and has outperformed year-to-date. Stock selection contributed to the Fund’s performance during the quarter. The Financials and Utilities sectors outperformed, while the Consumer Discretionary, Consumer Staples and Energy sectors detracted from performance. Additionally, you can check out the fund’s top 5 holdings for its top picks in 2022.

Heartland Advisors discussed stocks like Constellation Energy Corporation (NASDAQ:CEG) in the third quarter letter to investors. Based in Baltimore, Maryland, Constellation Energy Corporation (NASDAQ: CEG) is an electric power generation and distribution company. On October 12, 2022, Constellation Energy Corporation (NASDAQ:CEG) stock closed at $82.16 per share. Constellation Energy Corporation’s (NASDAQ:CEG) one-month return was -6.69% and its shares have gained 37.35% of their value over the past 3 months. Constellation Energy Corporation (NASDAQ:CEG) has a market capitalization of $27.45 billion.

Here’s what Heartland Advisors specifically said about Constellation Energy Corporation (NASDAQ:CEG) in its Q3 2022 letter to investors:

“Our best performing position during the quarter was Constellation Energy Corporation (NASDAQ: CEG) in the utilities sector. CEG is a prime example of “deep value” with a self-help catalyst and is the leading provider of clean energy in the United States, primarily derived from nuclear power. Earlier this year, the company was spun off from a former long-term utility holding company. After the split, we added to our position in CEG, convinced that the company was significantly undervalued and that catalysts were in place to change investor perception.

One such catalyst was the passage in August of the Cut Inflation Act of 2022. Nuclear power has never benefited from its zero-carbon properties, such as wind and solar. This legislation provides nuclear power plants with a zero-carbon treatment, establishing a “floor” under electricity prices that could shield CEG from much of the potential downward swings in commodity electricity prices.”

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Constellation Energy Corporation (NASDAQ:CEG) is not on our list of the 30 most popular stocks among hedge funds. According to our database, 43 hedge fund portfolios held Constellation Energy Corporation (NASDAQ:CEG) at the end of the second quarter, up from 47 in the prior quarter.

We discussed Constellation Energy Corporation (NASDAQ:CEG) in another article and shared billionaire David Harding’s list of energy stocks to buy. Additionally, please see our Q3 2022 Letters to Hedge Fund Investors page for more letters to hedge fund investors and other leading investors.

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Disclosure: none. This article originally appeared on Insider Monkey.

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