Crowding shifts hit Engie and E.ON, renewable stocks see weak sentiment: UBS

Investing.com -- Crowding shifts in European utilities have left Engie (EPA:ENGIE) and E.ON (ETR:EONGn) with weaker positioning, UBS analysts say, while sentiment on renewable stocks remains subdued.

The bank’s latest quant analysis, which tracks investor positioning across 34 utilities, showed that as of September 11, there was a net positive change overall, with 21 stocks seeing positive crowding compared with 19 at the end of August.

Still, sentiment worsened for 14 names, while 20 recorded improvements.

The bank’s “crowding factor” combines data from prime brokerage, stock loans, regulatory filings, and proprietary sources. Scores range from -30 to +30, with higher positive values indicating crowded longs and lower negative scores crowded shorts.

Under this framework, a stock heavily concentrated among one investor type is deemed crowded on either the long or short side.

Engie and E.ON stood out on the downside. Among net long positions, Engie’s crowding score fell from +16 to +10 and E.ON’s from +9 to +6, marking the steepest deteriorations.

On the flip side, Spanish electricity grid operator Redeia (BME:REDE) improved from +2 to +6, making it one of the strongest gainers in the update.

On the short side, UBS highlighted Oersted (CSE:ORSTED) and Elia (EBR:ELI) as the most crowded, with further deterioration for Oersted, whose score dropped from -9 to -11.

Endesa SA (BME:ELE) also weakened, slipping from -3 to -5.

Conversely, SSE PLC (LON:SSE) improved from -5 to -2 and Pennon from -9 to -7, showing some easing of negative positioning.

UBS analysts said that renewable stocks remain the most negatively crowded, with an average score of -6, while integrated utilities continue to attract more positive sentiment.

“Renewable stocks are most negatively crowded with an average score of -6, while crowding remains most positive on integrated names,” a team led by Wanda Serwinowska wrote.