In this article we will take a look at whether hedge funds think CMS Energy Corporation (NYSE:CMS) is a good investment right now. We check hedge fund and billionaire investor sentiment before delving into hours of research. Hedge funds spend millions of dollars on Ivy League graduates, unconventional data sources, expert networks, and get tips from investment bankers and industry insiders. Sure they sometimes fail miserably, but their consensus stock picks historically outperformed the market after adjusting for known risk factors.
CMS Energy Corporation (NYSE:CMS) shareholders have witnessed an increase in hedge fund sentiment in recent months. CMS Energy Corporation (NYSE:CMS) was in 28 hedge funds’ portfolios at the end of March. The all time high for this statistic is 30. Our calculations also showed that CMS isn’t among the 30 most popular stocks among hedge funds (click for Q1 rankings).
Why do we pay any attention at all to hedge fund sentiment? Our research has shown that a select group of hedge fund holdings outperformed the S&P 500 ETFs by 115 percentage points since March 2017 (see the details here). That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, economists warn of inflation flare up. So, we are checking out this backdoor gold play that has hit peak gains of 718% in a little over a year. We go through lists like the 10 best battery stocks to pick the next Tesla that will deliver a 10x return. Even though we recommend positions in only a tiny fraction of the companies we analyze, we check out as many stocks as we can. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. You can subscribe to our free daily newsletter on our homepage. Now let’s view the recent hedge fund action surrounding CMS Energy Corporation (NYSE:CMS).
Do Hedge Funds Think CMS Is A Good Stock To Buy Now?
At Q1’s end, a total of 28 of the hedge funds tracked by Insider Monkey were long this stock, a change of 17% from one quarter earlier. On the other hand, there were a total of 28 hedge funds with a bullish position in CMS a year ago. So, let’s examine which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
According to Insider Monkey’s hedge fund database, Rajiv Jain’s GQG Partners has the biggest position in CMS Energy Corporation (NYSE:CMS), worth close to $372.9 million, corresponding to 1.4% of its total 13F portfolio. The second largest stake is held by Millennium Management, managed by Israel Englander, which holds a $161.9 million position; the fund has 0.1% of its 13F portfolio invested in the stock. Some other members of the smart money with similar optimism comprise D. E. Shaw’s D E Shaw, John Overdeck and David Siegel’s Two Sigma Advisors and Ken Griffin’s Citadel Investment Group. In terms of the portfolio weights assigned to each position Coann Capital allocated the biggest weight to CMS Energy Corporation (NYSE:CMS), around 8.79% of its 13F portfolio. GQG Partners is also relatively very bullish on the stock, dishing out 1.36 percent of its 13F equity portfolio to CMS.
With a general bullishness amongst the heavyweights, specific money managers have jumped into CMS Energy Corporation (NYSE:CMS) headfirst. Adage Capital Management, managed by Phill Gross and Robert Atchinson, established the biggest position in CMS Energy Corporation (NYSE:CMS). Adage Capital Management had $19.5 million invested in the company at the end of the quarter. Matthew Davis’s Coann Capital also initiated a $10.3 million position during the quarter. The other funds with brand new CMS positions are Paul Tudor Jones’s Tudor Investment Corp, Dmitry Balyasny’s Balyasny Asset Management, and Brad Dunkley and Blair Levinsky’s Waratah Capital Advisors.
Let’s check out hedge fund activity in other stocks similar to CMS Energy Corporation (NYSE:CMS). These stocks are Waters Corporation (NYSE:WAT), Essex Property Trust Inc (NYSE:ESS), Warner Music Group Corp. (NASDAQ:WMG), Logitech International SA (NASDAQ:LOGI), Extra Space Storage, Inc. (NYSE:EXR), CureVac N.V. (NASDAQ:CVAC), and SK Telecom Co., Ltd. (NYSE:SKM). This group of stocks’ market caps are similar to CMS’s market cap.
|Ticker||No of HFs with positions||Total Value of HF Positions (x1000)||Change in HF Position|
View table here if you experience formatting issues.
As you can see these stocks had an average of 21.6 hedge funds with bullish positions and the average amount invested in these stocks was $574 million. That figure was $955 million in CMS’s case. Waters Corporation (NYSE:WAT) is the most popular stock in this table. On the other hand SK Telecom Co., Ltd. (NYSE:SKM) is the least popular one with only 8 bullish hedge fund positions. CMS Energy Corporation (NYSE:CMS) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for CMS is 75.5. Stocks with higher number of hedge fund positions relative to other stocks as well as relative to their historical range receive a higher sentiment score. This is a slightly positive signal but we’d rather spend our time researching stocks that hedge funds are piling on. Our calculations showed that top 5 most popular stocks among hedge funds returned 95.8% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 40 percentage points. These stocks gained 24% in 2021 through July 9th and beat the market again by 6.7 percentage points. Unfortunately CMS wasn’t nearly as popular as these 5 stocks and hedge funds that were betting on CMS were disappointed as the stock returned -0.8% since the end of March (through 7/9) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 5 most popular stocks among hedge funds as many of these stocks already outperformed the market since 2019.
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Disclosure: None. This article was originally published at Insider Monkey.