Is Public Service Enterprise Group Incorporated (PEG) A Good Stock To Buy?

In this article we will analyze whether Public Service Enterprise Group Incorporated (NYSE:PEG) is a good investment right now by following the lead of some of the best investors in the world and piggybacking their ideas. There’s no better way to get these firms’ immense resources and analytical capabilities working for us than to follow their lead into their best ideas. While not all of these picks will be winners, our research shows that these picks historically outperformed the market by double digits annually.

Is PEG a good stock to buy? Hedge funds were taking a bearish view. The number of bullish hedge fund bets were cut by 4 recently. Public Service Enterprise Group Incorporated (NYSE:PEG) was in 24 hedge funds’ portfolios at the end of the first quarter of 2021. The all time high for this statistic is 34. Our calculations also showed that PEG isn’t among the 30 most popular stocks among hedge funds (click for Q1 rankings).

To the average investor there are a lot of signals investors use to size up publicly traded companies. A couple of the most under-the-radar signals are hedge fund and insider trading sentiment. Our experts have shown that, historically, those who follow the best picks of the top investment managers can outpace the broader indices by a solid amount (see the details here). Also, our monthly newsletter’s portfolio of long stock picks returned 206.8% since March 2017 (through May 2021) and beat the S&P 500 Index by more than 115 percentage points. You can download a sample issue of this newsletter on our website .


Cliff Asness of AQR Capital Management

At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, Chuck Schumer recently stated that marijuana legalization will be a Senate priority. So, we are checking out this under the radar stock that will benefit from this. 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. With all of this in mind let’s take a look at the new hedge fund action encompassing Public Service Enterprise Group Incorporated (NYSE:PEG).

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

At the end of March, a total of 24 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -14% from one quarter earlier. The graph below displays the number of hedge funds with bullish position in PEG over the last 23 quarters. With hedge funds’ sentiment swirling, there exists a few key hedge fund managers who were increasing their stakes substantially (or already accumulated large positions).

Of the funds tracked by Insider Monkey, Zimmer Partners, managed by Stuart J. Zimmer, holds the number one position in Public Service Enterprise Group Incorporated (NYSE:PEG). Zimmer Partners has a $121.8 million position in the stock, comprising 1.7% of its 13F portfolio. The second largest stake is held by Cliff Asness of AQR Capital Management, with a $54.5 million position; 0.1% of its 13F portfolio is allocated to the stock. Other peers that are bullish consist of Phill Gross and Robert Atchinson’s Adage Capital Management, Michael Gelband’s ExodusPoint Capital and Dmitry Balyasny’s Balyasny Asset Management. In terms of the portfolio weights assigned to each position Zimmer Partners allocated the biggest weight to Public Service Enterprise Group Incorporated (NYSE:PEG), around 1.65% of its 13F portfolio. Beech Hill Partners is also relatively very bullish on the stock, dishing out 1.1 percent of its 13F equity portfolio to PEG.

Judging by the fact that Public Service Enterprise Group Incorporated (NYSE:PEG) has experienced bearish sentiment from the smart money, it’s safe to say that there was a specific group of hedge funds that slashed their positions entirely in the first quarter. At the top of the heap, Bernard Lambilliotte’s Ecofin Ltd dumped the largest investment of all the hedgies monitored by Insider Monkey, totaling an estimated $9.3 million in stock. D. E. Shaw’s fund, D E Shaw, also sold off its stock, about $6.3 million worth. These transactions are intriguing to say the least, as total hedge fund interest dropped by 4 funds in the first quarter.

Let’s go over hedge fund activity in other stocks similar to Public Service Enterprise Group Incorporated (NYSE:PEG). We will take a look at Chunghwa Telecom Co., Ltd (NYSE:CHT), SBA Communications Corporation (NASDAQ:SBAC), Skyworks Solutions Inc (NASDAQ:SWKS), Fortinet Inc (NASDAQ:FTNT), Welltower Inc. (NYSE:WELL), Eversource Energy (NYSE:ES), and Sun Life Financial Inc. (NYSE:SLF). All of these stocks’ market caps are similar to PEG’s market cap.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
CHT 3 153173 -2
SBAC 38 2090468 -5
SWKS 33 765774 -8
FTNT 23 906297 -9
WELL 21 326506 -5
ES 24 421208 0
SLF 17 139250 -2
Average 22.7 686097 -4.4

View table here if you experience formatting issues.

As you can see these stocks had an average of 22.7 hedge funds with bullish positions and the average amount invested in these stocks was $686 million. That figure was $287 million in PEG’s case. SBA Communications Corporation (NASDAQ:SBAC) is the most popular stock in this table. On the other hand Chunghwa Telecom Co., Ltd (NYSE:CHT) is the least popular one with only 3 bullish hedge fund positions. Public Service Enterprise Group Incorporated (NYSE:PEG) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for PEG is 52.2. 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 23.8% in 2021 through July 16th and beat the market again by 7.7 percentage points. Unfortunately PEG wasn’t nearly as popular as these 5 stocks and hedge funds that were betting on PEG were disappointed as the stock returned 3.4% since the end of March (through 7/16) 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.