The latest 13F reporting period has come and gone, and Insider Monkey have plowed through 823 13F filings that hedge funds and well-known value investors are required to file by the SEC. The 13F filings show the funds’ and investors’ portfolio positions as of June 30th, when the S&P 500 Index was trading around the 3100 level. Since the end of March, investors decided to bet on the economic recovery and a stock market rebound. S&P 500 Index returned more than 50% since its bottom. In this article you are going to find out whether hedge funds thought NextEra Energy, Inc. (NYSE:NEE) was a good investment heading into the third quarter and how the stock traded in comparison to the top hedge fund picks.
NextEra Energy, Inc. (NYSE:NEE) shareholders have witnessed an increase in enthusiasm from smart money in recent months. NextEra Energy, Inc. (NYSE:NEE) was in 55 hedge funds’ portfolios at the end of June. The all time high for this statistics is 52. This means the bullish number of hedge fund positions in this stock currently sits at its all time high. There were 52 hedge funds in our database with NEE holdings at the end of March. Our calculations also showed that NEE isn’t among the 30 most popular stocks among hedge funds (click for Q2 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 financial world there are a large number of tools investors have at their disposal to grade stocks. A pair of the most under-the-radar tools are hedge fund and insider trading indicators. We have shown that, historically, those who follow the top picks of the best fund managers can outperform the broader indices by a solid amount. Insider Monkey’s monthly stock picks returned 101% since March 2017 and outperformed the S&P 500 ETFs by more than 56 percentage points. Our short strategy outperformed the S&P 500 short ETFs by 20 percentage points annually (see the details here). That’s why we believe hedge fund sentiment is a useful indicator that investors should pay attention to.
At Insider Monkey we scour multiple sources to uncover the next great investment idea. Federal Reserve has been creating trillions of dollars electronically to keep the interest rates near zero. We believe this will lead to inflation and boost precious metals prices. So, we are checking out this junior gold mining stock.. We go through lists like the 10 most profitable companies in America to pick the best large-cap stocks to buy. 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. If you want to find out the best healthcare stock to buy right now, you can watch our latest hedge fund manager interview here. With all of this in mind let’s take a glance at the recent hedge fund action surrounding NextEra Energy, Inc. (NYSE:NEE).
How are hedge funds trading NextEra Energy, Inc. (NYSE:NEE)?
Heading into the third quarter of 2020, a total of 55 of the hedge funds tracked by Insider Monkey were long this stock, a change of 6% from the previous quarter. By comparison, 40 hedge funds held shares or bullish call options in NEE 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.
When looking at the institutional investors followed by Insider Monkey, Ken Fisher’s Fisher Asset Management has the largest position in NextEra Energy, Inc. (NYSE:NEE), worth close to $705.7 million, comprising 0.7% of its total 13F portfolio. Coming in second is Cliff Asness of AQR Capital Management, with a $172 million position; the fund has 0.3% of its 13F portfolio invested in the stock. Some other peers with similar optimism contain Ken Griffin’s Citadel Investment Group, D. E. Shaw’s D E Shaw and Phill Gross and Robert Atchinson’s Adage Capital Management. In terms of the portfolio weights assigned to each position Inherent Group allocated the biggest weight to NextEra Energy, Inc. (NYSE:NEE), around 14.19% of its 13F portfolio. Ecofin Ltd is also relatively very bullish on the stock, earmarking 12.22 percent of its 13F equity portfolio to NEE.
With a general bullishness amongst the heavyweights, specific money managers were breaking ground themselves. Fisher Asset Management, managed by Ken Fisher, created the most valuable position in NextEra Energy, Inc. (NYSE:NEE). Fisher Asset Management had $705.7 million invested in the company at the end of the quarter. Benjamin A. Smith’s Laurion Capital Management also made a $22.1 million investment in the stock during the quarter. The following funds were also among the new NEE investors: Donald Sussman’s Paloma Partners, Tony Davis’s Inherent Group, and Alec Litowitz and Ross Laser’s Magnetar Capital.
Let’s also examine hedge fund activity in other stocks similar to NextEra Energy, Inc. (NYSE:NEE). We will take a look at Texas Instruments Incorporated (NASDAQ:TXN), Union Pacific Corporation (NYSE:UNP), American Tower Corporation (NYSE:AMT), Shopify Inc (NYSE:SHOP), Linde plc (NYSE:LIN), Philip Morris International Inc. (NYSE:PM), and International Business Machines Corp. (NYSE:IBM). All of these stocks’ market caps are similar to NEE’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 56 hedge funds with bullish positions and the average amount invested in these stocks was $3325 million. That figure was $1944 million in NEE’s case. Union Pacific Corporation (NYSE:UNP) is the most popular stock in this table. On the other hand International Business Machines Corp. (NYSE:IBM) is the least popular one with only 46 bullish hedge fund positions. NextEra Energy, Inc. (NYSE:NEE) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for NEE is 58.5. 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. 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 28.2% in 2020 through August 24th and still beat the market by 20.6 percentage points. A small number of hedge funds were also right about betting on NEE as the stock returned 17.7% since the end of June and outperformed the market by an even larger margin.
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Disclosure: None. This article was originally published at Insider Monkey.