Is NRG Energy (NRG) a Good Value Stock?

Legacy Ridge Capital Management, LLC recently published its “Legacy Ridge Capital Partners Equity Fund I” fourth quarter 2022 investor letter, which can be downloaded here. In 2022, the fund returned 12.5% gross and 10.3% net of performance fees compared to a -18.1% return for the S&P 500 Index. In addition, please check the fund’s top five holdings to know its best picks in 2022.

Legacy Ridge Capital highlighted stocks like NRG Energy, Inc. (NYSE:NRG) in its Q4 2022 investor letter. Headquartered in Houston, Texas, NRG Energy, Inc. (NYSE:NRG) operates as an integrated power company. On February 1, 2023, NRG Energy, Inc. (NYSE:NRG) stock closed at $34.60 per share. One-month return of NRG Energy, Inc. (NYSE:NRG) was 7.82%, and its shares lost 13.24% of their value over the last 52 weeks. NRG Energy, Inc. (NYSE:NRG) has a market capitalization of $7.971 billion.

Legacy Ridge Capital made the following comment about NRG Energy, Inc. (NYSE:NRG) in its Q4 2022 investor letter:

NRG Energy, Inc. (NYSE:NRG) was covered in the 2019 letter with VST. We sold the shares as COVID induced volatility presented better risk/reward opportunities, but never subsequently repurchased shares—as we did with VST. Not only do we think VST is a better value, but the management team at NRG appears to have gone astray. Despite coming to his position during an activist campaign by Elliott Management in 2017, when the prior empire-building CEO was shown the door, the replacement CEO has seemingly embarked on the same failed strategy. In early December they announced the purchase of Vivint Smart Home, a smart home platform company, for $2.8 billion. The transaction diversifies NRG’s business, increases leverage, dramatically reduces intermediate-term shareholder capital returns, and most importantly, is the opposite of what management told us they were going to do when they assumed the role in 2017. The stock fell 15% on the day of the announcement and is down another 5% since then, and now 10% lower than when we first wrote about it. We like the generation business at NRG and the valuation is almost back to interesting, but we’d probably have to see turnover in the C-suite and a refreshed corporate strategy to reignite our enthusiasm.”

Photo by Andreas Gücklhorn on Unsplash

NRG Energy, Inc. (NYSE:NRG) is not on our list of 30 Most Popular Stocks Among Hedge Funds. As per our database, 27 hedge fund portfolios held NRG Energy, Inc. (NYSE:NRG) at the end of the third quarter which was 29 in the previous quarter.

We discussed NRG Energy, Inc. (NYSE:NRG) in another article and shared the list of most undervalued solar stocks to buy according to hedge funds. In addition, please check out our hedge fund investor letters Q4 2022 page for more investor letters from hedge funds and other leading investors.

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Disclosure: None. This article is originally published at Insider Monkey.