Is Duke Energy Corporation (DUK) Going to Burn These Hedge Funds?

At Insider Monkey, we pore over the filings of nearly 867 top investment firms every quarter, a process we have now completed for the latest reporting period. The data we’ve gathered as a result gives us access to a wealth of collective knowledge based on these firms’ portfolio holdings as of September 30th. In this article, we will use that wealth of knowledge to determine whether or not Duke Energy Corporation (NYSE:DUK) makes for a good investment right now.

Is Duke Energy Corporation (NYSE:DUK) ready to rally soon? Investors who are in the know were taking a bearish view. The number of bullish hedge fund positions shrunk by 4 in recent months. Duke Energy Corporation (NYSE:DUK) was in 32 hedge funds’ portfolios at the end of September. The all time high for this statistic is 38. Our calculations also showed that DUK isn’t among the 30 most popular stocks among hedge funds (click for Q3 rankings). There were 36 hedge funds in our database with DUK holdings at the end of June.


Cliff Asness of AQR Capital Management

At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, lithium prices have more than doubled over the past year, so we go through lists like the 10 best EV 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. Keeping this in mind we’re going to take a look at the new hedge fund action encompassing Duke Energy Corporation (NYSE:DUK).

Do Hedge Funds Think DUK Is A Good Stock To Buy Now?

At the end of September, a total of 32 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -11% from one quarter earlier. Below, you can check out the change in hedge fund sentiment towards DUK over the last 25 quarters. With hedgies’ positions undergoing their usual ebb and flow, there exists a few notable hedge fund managers who were increasing their stakes considerably (or already accumulated large positions).

Is DUK A Good Stock To Buy?

According to Insider Monkey’s hedge fund database, Renaissance Technologies has the largest position in Duke Energy Corporation (NYSE:DUK), worth close to $167.9 million, comprising 0.2% of its total 13F portfolio. On Renaissance Technologies’s heels is Elliott Investment Management, led by Paul Singer, holding a $97.6 million position; the fund has 0.7% of its 13F portfolio invested in the stock. Other professional money managers that are bullish encompass Cliff Asness’s AQR Capital Management, Ken Griffin’s Citadel Investment Group and Phill Gross and Robert Atchinson’s Adage Capital Management. In terms of the portfolio weights assigned to each position Claar Advisors allocated the biggest weight to Duke Energy Corporation (NYSE:DUK), around 2.88% of its 13F portfolio. Jones Road Capital Management is also relatively very bullish on the stock, dishing out 1.66 percent of its 13F equity portfolio to DUK.

Seeing as Duke Energy Corporation (NYSE:DUK) has experienced declining sentiment from the entirety of the hedge funds we track, logic holds that there exists a select few fund managers that decided to sell off their positions entirely by the end of the third quarter. Intriguingly, Sander Gerber’s Hudson Bay Capital Management said goodbye to the biggest stake of the “upper crust” of funds followed by Insider Monkey, comprising close to $11.9 million in stock, and Steve Pattyn’s Yaupon Capital was right behind this move, as the fund cut about $5.4 million worth. These transactions are intriguing to say the least, as aggregate hedge fund interest was cut by 4 funds by the end of the third quarter.

Let’s go over hedge fund activity in other stocks – not necessarily in the same industry as Duke Energy Corporation (NYSE:DUK) but similarly valued. These stocks are Crown Castle International Corp. (NYSE:CCI), Chubb Limited (NYSE:CB), The Bank of Nova Scotia (NYSE:BNS), The Sherwin-Williams Company (NYSE:SHW), Capital One Financial Corp. (NYSE:COF), Fiserv, Inc. (NASDAQ:FISV), and Equinix Inc (NASDAQ:EQIX). This group of stocks’ market valuations match DUK’s market valuation.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
CCI 45 2089073 3
CB 30 1272774 -12
BNS 17 193321 3
SHW 44 1576816 -5
COF 55 4708790 -9
FISV 65 3945223 -7
EQIX 31 1195457 -2
Average 41 2140208 -4.1

View table here if you experience formatting issues.

As you can see these stocks had an average of 41 hedge funds with bullish positions and the average amount invested in these stocks was $2140 million. That figure was $688 million in DUK’s case. Fiserv, Inc. (NASDAQ:FISV) is the most popular stock in this table. On the other hand The Bank of Nova Scotia (NYSE:BNS) is the least popular one with only 17 bullish hedge fund positions. Duke Energy Corporation (NYSE:DUK) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for DUK is 41.9. 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 negative signal and 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 28.6% in 2021 through November 30th and surpassed the market again by 5.6 percentage points. Unfortunately DUK wasn’t nearly as popular as these 5 stocks (hedge fund sentiment was quite bearish); DUK investors were disappointed as the stock returned 0.4% since the end of September (through 11/30) 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 most of these stocks already outperformed the market in 2021.

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