A whopping number of 13F filings filed with U.S. Securities and Exchange Commission has been processed by Insider Monkey so that individual investors can look at the overall hedge fund sentiment towards the stocks included in their watchlists. These freshly-submitted public filings disclose money managers’ equity positions as of the end of the three-month period that ended December 31, so let’s proceed with the discussion of the hedge fund sentiment on NextEra Energy, Inc. (NYSE:NEE).
NextEra Energy, Inc. (NYSE:NEE) investors should be aware of an increase in enthusiasm from smart money recently. NEE was in 37 hedge funds’ portfolios at the end of December. There were 32 hedge funds in our database with NEE holdings at the end of the previous quarter. Our calculations also showed that NEE isn’t among the 30 most popular stocks among hedge funds.
Hedge funds’ reputation as shrewd investors has been tarnished in the last decade as their hedged returns couldn’t keep up with the unhedged returns of the market indices. Our research has shown that hedge funds’ large-cap stock picks indeed failed to beat the market between 1999 and 2016. However, we were able to identify in advance a select group of hedge fund holdings that outperformed the market by 32 percentage points since May 2014 through March 12, 2019 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that’ll significantly underperform the market. We have been tracking and sharing the list of these stocks since February 2017 and they lost 27.5% through March 12, 2019. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
Let’s view the new hedge fund action surrounding NextEra Energy, Inc. (NYSE:NEE).
What have hedge funds been doing with NextEra Energy, Inc. (NYSE:NEE)?
At Q4’s end, a total of 37 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 16% from the previous quarter. On the other hand, there were a total of 33 hedge funds with a bullish position in NEE a year ago. So, let’s review which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
More specifically, AQR Capital Management was the largest shareholder of NextEra Energy, Inc. (NYSE:NEE), with a stake worth $250.8 million reported as of the end of September. Trailing AQR Capital Management was Renaissance Technologies, which amassed a stake valued at $149.2 million. Adage Capital Management, OZ Management, and Polaris Capital Management were also very fond of the stock, giving the stock large weights in their portfolios.
With a general bullishness amongst the heavyweights, key money managers have been driving this bullishness. Arrowstreet Capital, founded by Peter Rathjens, Bruce Clarke and John Campbell, assembled the biggest position in NextEra Energy, Inc. (NYSE:NEE). Arrowstreet Capital had $16.4 million invested in the company at the end of the quarter. Shawn Bergerson and Martin Kalish’s Waterstone Capital Management also initiated a $14.2 million position during the quarter. The other funds with brand new NEE positions are Nick Niell’s Arrowgrass Capital Partners, Steve Pattyn’s Yaupon Capital, and Jeffrey Talpins’s Element Capital Management.
Let’s also examine hedge fund activity in other stocks similar to NextEra Energy, Inc. (NYSE:NEE). These stocks are Rio Tinto Group (NYSE:RIO), NVIDIA Corporation (NASDAQ:NVDA), American Express Company (NYSE:AXP), and Gilead Sciences, Inc. (NASDAQ:GILD). This group of stocks’ market values are closest to NEE’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 42.75 hedge funds with bullish positions and the average amount invested in these stocks was $5640 million. That figure was $944 million in NEE’s case. Gilead Sciences, Inc. (NASDAQ:GILD) is the most popular stock in this table. On the other hand Rio Tinto Group (NYSE:RIO) is the least popular one with only 23 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. 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 15 most popular stocks among hedge funds returned 19.7% through March 15th and outperformed the S&P 500 ETF (SPY) by 6.6 percentage points. Unfortunately NEE wasn’t in this group. Hedge funds that bet on NEE were disappointed as the stock returned 10.8% and underperformed the market. If you are interested in investing in large cap stocks, you should check out the top 15 hedge fund stocks as 13 of these outperformed the market.
Disclosure: None. This article was originally published at Insider Monkey.