5 of the Smart Money’s Brightest Utility Plays: NorthWestern Corp (NWE), PG&E Corporation (PCG)

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Consolidated Edison (NYSE:ED) serves the greater New York City area and yields 4.2%. Once again, Renaissance Technologies, AQR, Millennium, DE Shaw, Citadel all appear as noteworthy shareholders, however, we must also mention David Harding’s Winton Capital Management.  In its December filing, the fund revealed a 782K-share position, making Consolidated Edison its largest holding.  In addition, Winton’s 13F shows large positions in Wisconsin Energy, Nextera Energy, and Southern Company, and ConEd has actually out-appreciated all but Wisconsin Energy since the start of 2013. Of this group, ConEd sports the second best dividend yield behind Southern (4.3%), and it has the cheapest valuation on a price-to-book basis (1.5x).

Duke Energy Corp (NYSE:DUK) is well known as the blue chip utility.  It provides utility services though numerous southern and central U.S. states; it currently yields 4.4%.  As with the other issues discussed above, a long list of hedge fund buyers underlies shares of Duke.  One particular fund to point out, using Duke to segue, is Duquesne Capital which has committed a significant portion of its portfolio to utilities: Southern is 3.85% of the portfolio, Duke 2.0%, and the aforementioned PG&E 1.93%. Duke sports an even lower valuation than ConEd at 1.2 times book, and obviously the income is equally as impressive. It’s easy to see why hedgies are bullish, and we may have to coin the new term “Income at a Reasonable Price” for this stock.

General bullishness in this space is driven by one overarching factor: the current low interest rate environment, and it’s always important to track the smart money’s sentiment when considering any investment strategy.

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