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Hedge Funds and other institutional investors have just completed filing their 13Fs with the Securities and Exchange Commission, revealing their equity portfolios as of the end of June. At Insider Monkey, we follow nearly 900 active hedge funds and notable investors and by analyzing their 13F filings, we can determine the stocks that they are collectively bullish on. One of their picks is Public Service Enterprise Group Incorporated (NYSE:PEG), so let’s take a closer look at the sentiment that surrounds it in the current quarter.
Is Public Service Enterprise Group Incorporated (NYSE:PEG) worth your attention right now? The smart money was getting more bullish. The number of bullish hedge fund bets rose by 2 lately. Public Service Enterprise Group Incorporated (NYSE:PEG) was in 26 hedge funds' portfolios at the end of June. 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 Q2 rankings).
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' small-cap stock picks managed to beat the market by double digits annually between 1999 and 2016, but the margin of outperformance has been declining in recent years. Nevertheless, we were still able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by 79 percentage points since March 2017 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that underperformed the market by 10 percentage points annually between 2006 and 2017. Interestingly the margin of underperformance of these stocks has been increasing in recent years. Investors who are long the market and short these stocks would have returned more than 27% annually between 2015 and 2017. We have been tracking and sharing the list of these stocks since February 2017 in our quarterly newsletter.
Stuart Zimmer of Zimmer Partners
At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, lithium mining is one of the fastest growing industries right now, so we are checking out stock pitches like this emerging lithium stock. 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. 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. Now let's check out the latest 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 the second quarter, a total of 26 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 8% from the first quarter of 2020. By comparison, 31 hedge funds held shares or bullish call options in PEG 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, Stuart J. Zimmer's Zimmer Partners has the biggest position in Public Service Enterprise Group Incorporated (NYSE:PEG), worth close to $120.9 million, accounting for 1.6% of its total 13F portfolio. The second most bullish fund manager is AQR Capital Management, led by Cliff Asness, holding a $73.2 million position; 0.1% of its 13F portfolio is allocated to the stock. Other professional money managers with similar optimism consist of Phill Gross and Robert Atchinson's Adage Capital Management, Steve Cohen's Point72 Asset Management and Paul Marshall and Ian Wace's Marshall Wace LLP. 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 1.63% of its 13F portfolio. Yaupon Capital is also relatively very bullish on the stock, dishing out 0.96 percent of its 13F equity portfolio to PEG.
As one would reasonably expect, some big names have been driving this bullishness. Point72 Asset Management, managed by Steve Cohen, assembled the most valuable position in Public Service Enterprise Group Incorporated (NYSE:PEG). Point72 Asset Management had $44.1 million invested in the company at the end of the quarter. Ryan Tolkin (CIO)'s Schonfeld Strategic Advisors also initiated a $19.6 million position during the quarter. The other funds with brand new PEG positions are D. E. Shaw's D E Shaw, Renaissance Technologies, and Steve Pattyn's Yaupon Capital.
Let's now review hedge fund activity in other stocks - not necessarily in the same industry as Public Service Enterprise Group Incorporated (NYSE:PEG) but similarly valued. We will take a look at Sun Life Financial Inc. (NYSE:SLF), Ecopetrol S.A. (NYSE:EC), Nokia Corporation (NYSE:NOK), Nasdaq, Inc. (NASDAQ:NDAQ), Fastenal Company (NASDAQ:FAST), Willis Towers Watson Public Limited Company (NASDAQ:WLTW), and Zscaler, Inc. (NASDAQ:ZS). This group of stocks' market caps match PEG's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position SLF,11,94573,-6 EC,6,95004,-2 NOK,26,494361,5 NDAQ,23,191757,1 FAST,25,650046,1 WLTW,70,5594291,4 ZS,38,1102517,4 Average,28.4,1174650,1 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 28.4 hedge funds with bullish positions and the average amount invested in these stocks was $1175 million. That figure was $393 million in PEG's case. Willis Towers Watson Public Limited Company (NASDAQ:WLTW) is the most popular stock in this table. On the other hand Ecopetrol S.A. (NYSE:EC) is the least popular one with only 6 bullish hedge fund positions. Public Service Enterprise Group Incorporated (NYSE:PEG) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for PEG is 45.6. 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 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 24.9% in 2021 through October 15th and still beat the market by 4.5 percentage points. A small number of hedge funds were also right about betting on PEG as the stock returned 4.8% since the end of the second quarter (through 10/15) and outperformed the market by an even larger margin.
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Disclosure: None. This article was originally published at Insider Monkey.