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Here is What Hedge Funds Think About Northeast Utilities System (NU)

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Northeast Utilities System (NYSE:NU) was in 11 hedge funds’ portfolio at the end of March. NU has experienced a decrease in hedge fund interest in recent months. There were 11 hedge funds in our database with NU holdings at the end of the previous quarter.

Northeast Utilities System (NYSE:NU)In the eyes of most investors, hedge funds are seen as worthless, outdated investment tools of the past. While there are greater than 8000 funds in operation at the moment, we hone in on the moguls of this club, about 450 funds. Most estimates calculate that this group oversees the lion’s share of the hedge fund industry’s total asset base, and by tracking their highest performing picks, we have brought to light a few investment strategies that have historically outstripped Mr. Market. Our small-cap hedge fund strategy outperformed the S&P 500 index by 18 percentage points annually for a decade in our back tests, and since we’ve started sharing our picks with our subscribers at the end of August 2012, we have outperformed the S&P 500 index by 23.3 percentage points in 8 months (see the details here).

Just as important, positive insider trading activity is another way to break down the financial markets. Obviously, there are lots of incentives for an executive to get rid of shares of his or her company, but just one, very obvious reason why they would buy. Plenty of academic studies have demonstrated the market-beating potential of this tactic if you understand what to do (learn more here).

Now, let’s take a gander at the latest action encompassing Northeast Utilities System (NYSE:NU).

Hedge fund activity in Northeast Utilities System (NYSE:NU)

In preparation for this quarter, a total of 11 of the hedge funds we track were bullish in this stock, a change of 0% from the first quarter. With the smart money’s positions undergoing their usual ebb and flow, there exists a few key hedge fund managers who were boosting their stakes meaningfully.

When looking at the hedgies we track, D E Shaw, managed by D. E. Shaw, holds the most valuable position in Northeast Utilities System (NYSE:NU). D E Shaw has a $83.5 million position in the stock, comprising 0.2% of its 13F portfolio. Coming in second is Israel Englander of Millennium Management, with a $67.4 million position; the fund has 0.3% of its 13F portfolio invested in the stock. Remaining peers with similar optimism include Mario Gabelli’s GAMCO Investors, Jim Simons’s Renaissance Technologies and Phill Gross and Robert Atchinson’s Adage Capital Management.

Seeing as Northeast Utilities System (NYSE:NU) has witnessed a declination in interest from hedge fund managers, we can see that there is a sect of hedge funds who were dropping their full holdings at the end of the first quarter. Interestingly, Cliff Asness’s AQR Capital Management cut the largest stake of the “upper crust” of funds we track, valued at close to $0.8 million in stock., and Ben Levine, Andrew Manuel and Stefan Renold of LMR Partners was right behind this move, as the fund said goodbye to about $0.7 million worth. These moves are interesting, as total hedge fund interest stayed the same (this is a bearish signal in our experience).

Insider trading activity in Northeast Utilities System (NYSE:NU)

Bullish insider trading is most useful when the company in focus has experienced transactions within the past half-year. Over the latest half-year time period, Northeast Utilities System (NYSE:NU) has experienced zero unique insiders purchasing, and 4 insider sales (see the details of insider trades here).

Let’s go over hedge fund and insider activity in other stocks similar to Northeast Utilities System (NYSE:NU). These stocks are Ameren Corp (NYSE:AEE), NRG Energy Inc (NYSE:NRG), NiSource Inc. (NYSE:NI), CenterPoint Energy, Inc. (NYSE:CNP), and Public Service Enterprise Group Inc. (NYSE:PEG). All of these stocks are in the diversified utilities industry and their market caps resemble NU’s market cap.

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