Insider Monkey has processed numerous 13F filings of hedge funds and successful value investors to create an extensive database of hedge fund holdings. The 13F filings show the hedge funds’ and successful investors’ positions as of the end of the third quarter. You can find articles about an individual hedge fund’s trades on numerous financial news websites. However, in this article we will take a look at their collective moves over the last 4 years and analyze what the smart money thinks of CMS Energy Corporation (NYSE:CMS) based on that data. Currently there are two ETFs with large CMS allocations: First Trust EIP Carbon Impact ETF (NYSE:ECLN) and Virtus Reaves Utilities ETF (NYSE:UTES).
CMS Energy Corporation (NYSE:CMS) investors should be aware of an increase in enthusiasm from smart money lately. Our calculations also showed that CMS isn’t among the 30 most popular stocks among hedge funds (click for Q3 rankings and see the video below for Q2 rankings).
Video: Click the image to 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 flagship best performing hedge funds strategy returned 91% since May 2014 and outperformed the Russell 2000 ETFs by nearly 40 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.
Unlike the largest US hedge funds that are convinced Dow will soar past 40,000 or the world’s most bearish hedge fund that’s more convinced than ever that a crash is coming, our long-short investment strategy doesn’t rely on bull or bear markets to deliver double digit returns. We only rely on the best performing hedge funds‘ buy/sell signals. Let’s review the key hedge fund action surrounding CMS Energy Corporation (NYSE:CMS).
What have hedge funds been doing with CMS Energy Corporation (NYSE:CMS)?
At Q3’s end, a total of 26 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 18% from one quarter earlier. On the other hand, there were a total of 22 hedge funds with a bullish position in CMS a year ago. So, let’s see which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
The largest stake in CMS Energy Corporation (NYSE:CMS) was held by GQG Partners, which reported holding $204.4 million worth of stock at the end of September. It was followed by Renaissance Technologies with a $150.9 million position. Other investors bullish on the company included Millennium Management, Citadel Investment Group, and Luminus Management. In terms of the portfolio weights assigned to each position Shelter Harbor Advisors allocated the biggest weight to CMS Energy Corporation (NYSE:CMS), around 6.46% of its portfolio. Centenus Global Management is also relatively very bullish on the stock, earmarking 2.3 percent of its 13F equity portfolio to CMS.
As one would reasonably expect, key money managers have been driving this bullishness. Balyasny Asset Management, managed by Dmitry Balyasny, assembled the most outsized position in CMS Energy Corporation (NYSE:CMS). Balyasny Asset Management had $16.5 million invested in the company at the end of the quarter. David E. Shaw’s D E Shaw also made a $5.8 million investment in the stock during the quarter. The other funds with brand new CMS positions are Joel Greenblatt’s Gotham Asset Management, Matthew Hulsizer’s PEAK6 Capital Management, and Donald Sussman’s Paloma Partners.
Let’s now take a look at hedge fund activity in other stocks similar to CMS Energy Corporation (NYSE:CMS). These stocks are Lennar Corporation (NYSE:LEN), KeyCorp (NYSE:KEY), Centene Corporation (NYSE:CNC), and Splunk Inc (NASDAQ:SPLK). This group of stocks’ market values resemble CMS’s market value.
|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 43 hedge funds with bullish positions and the average amount invested in these stocks was $1216 million. That figure was $943 million in CMS’s case. Lennar Corporation (NYSE:LEN) is the most popular stock in this table. On the other hand KeyCorp (NYSE:KEY) is the least popular one with only 28 bullish hedge fund positions. Compared to these stocks CMS Energy Corporation (NYSE:CMS) is even less popular than KEY. Hedge funds dodged a bullet by taking a bearish stance towards CMS. Our calculations showed that the top 20 most popular hedge fund stocks returned 37.4% in 2019 through the end of November and outperformed the S&P 500 ETF (SPY) by 9.9 percentage points. Unfortunately CMS wasn’t nearly as popular as these 20 stocks (hedge fund sentiment was very bearish); CMS investors were disappointed as the stock returned -3.6% during the fourth quarter (through the end of November) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 20 most popular stocks among hedge funds as 70 percent of these stocks already outperformed the market so far in Q4.
Disclosure: None. This article was originally published at Insider Monkey.