Duke Energy Corp (DUK): Not Doing Enough to Attract Smart Money

Hedge fund managers like David Einhorn, Dan Loeb, or Carl Icahn became billionaires through reaping large profits for their investors, which is why piggybacking their stock picks may provide us with significant returns as well. Many hedge funds, like Paul Singer’s Elliott Management, are pretty secretive, but we can still get some insights by analyzing their quarterly 13F filings. One of the most fertile grounds for large abnormal returns is hedge funds’ most popular small-cap picks, which are not so widely followed and often trade at a discount to their intrinsic value. In this article we will check out hedge fund activity in another small-cap stock: Duke Energy Corp (NYSE:DUK).

Is Duke Energy Corp (NYSE:DUK) an outstanding investment right now? Money managers are in an optimistic mood. The number of long hedge fund positions went up by 1 lately. At the end of this article we will also compare DUK to other stocks including The Bank of Nova Scotia (USA) (NYSE:BNS), Eni SpA (ADR) (NYSE:E), and National Grid plc (ADR) (NYSE:NGG) to get a better sense of its popularity.

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What have hedge funds been doing with Duke Energy Corp (NYSE:DUK)?

Heading into the fourth quarter of 2016, a total of 19 of the hedge funds tracked by Insider Monkey were bullish on this stock, a bump of 6% from one quarter earlier. Hedge fund ownership of DUK has been volatile over the past year, particularly in Q4 2015 and Q1 2016. With hedgies’ sentiment swirling, there exists a select group of noteworthy hedge fund managers who were upping their stakes considerably (or already accumulated large positions).

According to publicly available hedge fund and institutional investor holdings data compiled by Insider Monkey, Jim Simons’ Renaissance Technologies has the biggest position in Duke Energy Corp (NYSE:DUK), worth close to $262.8 million. The second largest stake is held by Zimmer Partners, managed by Stuart J. Zimmer, which holds a $111.6 million position; 3% of its 13F portfolio is allocated to the company. Other professional money managers that are bullish comprise Peter Rathjens, Bruce Clarke and John Campbell’s Arrowstreet Capital, Jonathan Barrett and Paul Segal’s Luminus Management and Cliff Asness’ AQR Capital Management.

As aggregate interest increased, key hedge funds were leading the bulls’ herd. Citadel Investment Group, managed by Ken Griffin, assembled the most outsized call position in Duke Energy Corp (NYSE:DUK). Citadel Investment Group had $9.8 million invested in the company at the end of the quarter. Matthew Tewksbury’s Stevens Capital Management also made a $2 million investment in the stock during the quarter. The other funds with new positions in the stock are John Overdeck and David Siegel’s Two Sigma Advisors, Ben Levine, Andrew Manuel and Stefan Renold’s LMR Partners, and Michael Platt and William Reeves’ BlueCrest Capital Mgmt..

Let’s go over hedge fund activity in other stocks similar to Duke Energy Corp (NYSE:DUK). We will take a look at The Bank of Nova Scotia (USA) (NYSE:BNS), Eni SpA (ADR) (NYSE:E), National Grid plc (ADR) (NYSE:NGG), and Thermo Fisher Scientific Inc. (NYSE:TMO). All of these stocks’ market caps are closest to DUK’s market cap.

As you can see these stocks had an average of 17.75 hedge funds with bullish positions and the average amount invested in these stocks was $891 million. That figure was $640 million in DUK’s case. Thermo Fisher Scientific Inc. (NYSE:TMO) is the most popular stock in this table. On the other hand Eni SpA (ADR) (NYSE:E) is the least popular one with only 4 bullish hedge fund positions. Duke Energy Corp (NYSE:DUK) is not the most popular stock in this group but hedge fund interest is still above average. This is a slightly positive signal but we’d rather spend our time researching stocks that hedge funds have a lot of money invested into. In this regard TMO might be a better candidate to consider a long position in.

Disclosure: None