Consolidated Edison, Inc. (ED): Hedge Funds Taking Some Chips Off The Table

We at Insider Monkey have gone over 821 13F filings that hedge funds and prominent investors are required to file by the SEC The 13F filings show the funds’ and investors’ portfolio positions as of March 31st, near the height of the coronavirus market crash. In this article, we look at what those funds think of Consolidated Edison, Inc. (NYSE:ED) based on that data.

Consolidated Edison, Inc. (NYSE:ED) investors should be aware of a decrease in activity from the world’s largest hedge funds in recent months. Our calculations also showed that ED isn’t among the 30 most popular stocks among hedge funds (click for Q1 rankings and see the video for a quick look at the top 5 stocks).

Video: Watch our video about the top 5 most popular hedge fund stocks.

In the eyes of most stock holders, hedge funds are perceived as slow, outdated investment vehicles of yesteryear. While there are more than 8000 funds trading today, Our researchers look at the moguls of this club, around 850 funds. These investment experts command bulk of the smart money’s total asset base, and by tailing their unrivaled investments, Insider Monkey has uncovered numerous investment strategies that have historically beaten the S&P 500 index. Insider Monkey’s flagship short hedge fund strategy surpassed the S&P 500 short ETFs by around 20 percentage points a year since its inception in March 2017. Our portfolio of short stocks lost 36% since February 2017 (through May 18th) even though the market was up 30% during the same period. We just shared a list of 8 short targets in our latest quarterly update .


Ray Dalio of Bridgewater Associates

We leave no stone unturned when looking for the next great investment idea. For example, we believe electric vehicles and energy storage are set to become giant markets, and we want to take advantage of the declining lithium prices amid the COVID-19 pandemic. So we are checking out investment opportunities like these. We interview hedge fund managers and ask them about their best ideas. If you want to find out the best healthcare stock to buy right now, you can watch our latest hedge fund manager interview here. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. Our best call in 2020 was shorting the market when the S&P 500 was trading at 3150 after realizing the coronavirus pandemic’s significance before most investors. Now we’re going to take a look at the fresh hedge fund action encompassing Consolidated Edison, Inc. (NYSE:ED).

How are hedge funds trading Consolidated Edison, Inc. (NYSE:ED)?

At the end of the first quarter, a total of 25 of the hedge funds tracked by Insider Monkey were long this stock, a change of -4% from the previous quarter. On the other hand, there were a total of 23 hedge funds with a bullish position in ED a year ago. With hedge funds’ sentiment swirling, there exists an “upper tier” of key hedge fund managers who were adding to their holdings meaningfully (or already accumulated large positions).

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The largest stake in Consolidated Edison, Inc. (NYSE:ED) was held by Renaissance Technologies, which reported holding $372.4 million worth of stock at the end of September. It was followed by AQR Capital Management with a $233.6 million position. Other investors bullish on the company included Citadel Investment Group, D E Shaw, and Citadel Investment Group. In terms of the portfolio weights assigned to each position Centenus Global Management allocated the biggest weight to Consolidated Edison, Inc. (NYSE:ED), around 4.85% of its 13F portfolio. Quantamental Technologies is also relatively very bullish on the stock, setting aside 0.93 percent of its 13F equity portfolio to ED.

Due to the fact that Consolidated Edison, Inc. (NYSE:ED) has witnessed falling interest from the aggregate hedge fund industry, it’s easy to see that there were a few hedge funds that elected to cut their positions entirely by the end of the first quarter. Intriguingly, Clint Carlson’s Carlson Capital dropped the biggest stake of the “upper crust” of funds watched by Insider Monkey, worth close to $43.1 million in stock. Phill Gross and Robert Atchinson’s fund, Adage Capital Management, also dropped its stock, about $34.7 million worth. These moves are interesting, as total hedge fund interest fell by 1 funds by the end of the first quarter.

Let’s also examine hedge fund activity in other stocks similar to Consolidated Edison, Inc. (NYSE:ED). We will take a look at Eversource Energy (NYSE:ES), Canadian Imperial Bank of Commerce (NYSE:CM), Brown-Forman Corporation (NYSE:BF), and Cognizant Technology Solutions Corp (NASDAQ:CTSH). This group of stocks’ market caps are similar to ED’s market cap.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
ES 26 460667 2
CM 10 144510 -4
BF 28 482273 5
CTSH 38 2225496 -5
Average 25.5 828237 -0.5

View table here if you experience formatting issues.

As you can see these stocks had an average of 25.5 hedge funds with bullish positions and the average amount invested in these stocks was $828 million. That figure was $845 million in ED’s case. Cognizant Technology Solutions Corp (NASDAQ:CTSH) is the most popular stock in this table. On the other hand Canadian Imperial Bank of Commerce (NYSE:CM) is the least popular one with only 10 bullish hedge fund positions. Consolidated Edison, Inc. (NYSE:ED) is not the least popular stock in this group but hedge fund interest is still below average. This is a slightly negative signal and we’d rather spend our time researching stocks that hedge funds are piling on. Our calculations showed that top 10 most popular stocks among hedge funds returned 41.4% in 2019 and outperformed the S&P 500 ETF (SPY) by 10.1 percentage points. These stocks gained 13.9% in 2020 through June 10th and surpassed the market by 14.2 percentage points. Unfortunately ED wasn’t nearly as popular as these 10 stocks (hedge fund sentiment was quite bearish); ED investors were disappointed as the stock returned -0.3% during the second quarter and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 10 most popular stocks among hedge funds as most of these stocks already outperformed the market in 2020.

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