CenterPoint Energy, Inc. (CNP): Hedge Funds Are Buying, Should You?

Insider Monkey finished processing more than 700 13F filings made by hedge funds and prominent investors. These filings show these funds’ portfolio positions as of September 30. What do these smart investors think about CenterPoint Energy, Inc. (NYSE:CNP)?

CenterPoint Energy, Inc. (NYSE:CNP) shares haven’t seen a lot of action during the third quarter. Overall, hedge fund sentiment was unchanged. The stock was in 25 hedge funds’ portfolios at the end of September. At the end of this article, we will also compare CenterPoint Energy, Inc. (NYSE:CNP) to other stocks, including AMERCO (NASDAQ:UHAL), Hertz Global Holdings, Inc. (NYSE:HTZ), and Everest Re Group Ltd (NYSE:RE) to get a better sense of its popularity.

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In the eyes of most market participants, hedge funds are seen as underperforming, outdated financial vehicles of yesteryear. While there are more than 8000 funds with their doors open today, our researchers hone in on the masters of this group, about 700 funds. These hedge fund managers administer the majority of the smart money’s total asset base, and by tracking their inimitable investments, Insider Monkey has deciphered various investment strategies that have historically defeated Mr. Market. Insider Monkey’s small-cap hedge fund strategy outpaced the S&P 500 index by 12 percentage points annually for a decade in their back tests.

Now, let’s take a gander at the latest action regarding CenterPoint Energy, Inc. (NYSE:CNP).

How have hedgies been trading CenterPoint Energy, Inc. (NYSE:CNP)?

At the end of the last quarter, a total of 25 of the hedge funds tracked by Insider Monkey were bullish on this stock, flat over the previous quarter. With the smart money’s sentiment swirling, there exists an “upper tier” of notable hedge fund managers who were boosting their stakes meaningfully (or already accumulated large positions).

When looking at the institutional investors followed by Insider Monkey, Luminus Management, managed by Jonathan Barrett and Paul Segal, holds the most valuable position in CenterPoint Energy, Inc. (NYSE:CNP). Luminus Management has an $82.2 million position in the stock, comprising 2.5% of its 13F portfolio. On Luminus Management’s heels is Millennium Management, led by Israel Englander, holding a $39.6 million position; the fund has 0.1% of its 13F portfolio invested in the stock. Other professional money managers that hold long positions consist of John Overdeck and David Siegel’s Two Sigma Advisors, Renaissance Technologies, and Cliff Asness’ AQR Capital Management.

Seeing as CenterPoint Energy, Inc. (NYSE:CNP) has witnessed a declination in interest from hedge fund managers, it’s easy to see that there is a sect of hedge funds who were dropping their entire stakes in the third quarter. Intriguingly, David Harding’s Winton Capital Management sold off the largest investment of all the hedgies followed by Insider Monkey, comprising an estimated $7.6 million in stock, and Peter Muller’s PDT Partners was right behind this move, as the fund dropped about $6.2 million worth of shares. These bearish behaviors are intriguing to say the least, as total hedge fund interest stayed the same (this is a bearish signal in our experience).

Let’s go over hedge fund activity in other stocks similar to CenterPoint Energy, Inc. (NYSE:CNP). These stocks are AMERCO (NASDAQ:UHAL), Hertz Global Holdings, Inc. (NYSE:HTZ), Everest Re Group Ltd (NYSE:RE), and CDK Global Inc (NASDAQ:CDK). This group of stocks’ market values resembles CenterPoint Energy, Inc. (NYSE:CNP)’s market value.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
UHAL 27 290247 5
HTZ 54 3484224 -13
RE 27 735366 3
CDK 41 2736058 -4

As you can see, these stocks had an average of 37 hedge funds with bullish positions and the average amount invested in these stocks was $1.81 billion. That figure was $267 million in CenterPoint Energy, Inc. (NYSE:CNP)’s case. Hertz Global Holdings, Inc. (NYSE:HTZ) is the most popular stock in this table. On the other hand, AMERCO (NASDAQ:UHAL) is the least popular one with only 27 bullish hedge fund positions. Compared to these stocks, CenterPoint Energy, Inc. (NYSE:CNP) is even less popular than AMERCO (NASDAQ:UHAL). Considering that hedge funds aren’t fond of this stock in relation to other companies analyzed in this article, it may be a good idea to analyze it in detail and understand why the smart money isn’t behind this stock. This isn’t necessarily bad news. Although it is possible that hedge funds may think the stock is overpriced and view the stock as a short candidate, they may not be very familiar with the bullish thesis. In either case, more research is warranted.