After several tireless days we have finished crunching the numbers from nearly 750 13F filings issued by the elite hedge funds and other investment firms that we track at Insider Monkey, which disclosed those firms' equity portfolios as of June 28. The results of that effort will be put on display in this article, as we share valuable insight into the smart money sentiment towards CMS Energy Corporation (NYSE:CMS).
CMS Energy Corporation (NYSE:CMS) shares haven't seen a lot of action during the second quarter. Overall, hedge fund sentiment was unchanged. The stock was in 22 hedge funds' portfolios at the end of the second quarter of 2019. At the end of this article we will also compare CMS to other stocks including Nasdaq, Inc. (NASDAQ:NDAQ), The Cooper Companies, Inc. (NYSE:COO), and D.R. Horton, Inc. (NYSE:DHI) to get a better sense of its popularity. Our calculations also showed that CMS isn't among the 30 most popular stocks among hedge funds (view the video below). Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.
To the average investor there are dozens of gauges shareholders put to use to value their holdings. Some of the most under-the-radar gauges are hedge fund and insider trading activity. We have shown that, historically, those who follow the best picks of the best fund managers can outclass the S&P 500 by a superb margin (see the details here).
Unlike some fund managers who are betting on Dow reaching 40000 in a year, our long-short investment strategy doesn't rely on bull markets to deliver double digit returns. We only rely on hedge fund buy/sell signals. Let's go over the latest hedge fund action regarding CMS Energy Corporation (NYSE:CMS).
How have hedgies been trading CMS Energy Corporation (NYSE:CMS)?
Heading into the third quarter of 2019, a total of 22 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 0% from the previous quarter. The graph below displays the number of hedge funds with bullish position in CMS over the last 16 quarters. With the smart money's positions undergoing their usual ebb and flow, there exists an "upper tier" of key hedge fund managers who were increasing their holdings meaningfully (or already accumulated large positions).
[caption id="attachment_728376" align="aligncenter" width="473"] Jonathan Barrett of Luminus Management[/caption]
More specifically, Millennium Management was the largest shareholder of CMS Energy Corporation (NYSE:CMS), with a stake worth $228.2 million reported as of the end of March. Trailing Millennium Management was Renaissance Technologies, which amassed a stake valued at $142.9 million. Two Sigma Advisors, Citadel Investment Group, and AQR Capital Management were also very fond of the stock, giving the stock large weights in their portfolios.
Due to the fact that CMS Energy Corporation (NYSE:CMS) has witnessed bearish sentiment from the aggregate hedge fund industry, it's easy to see that there exists a select few hedgies who sold off their entire stakes by the end of the second quarter. Interestingly, Dmitry Balyasny's Balyasny Asset Management dumped the largest stake of all the hedgies monitored by Insider Monkey, worth close to $42.7 million in stock. Ben Levine, Andrew Manuel and Stefan Renold's fund, LMR Partners, also dropped its stock, about $0.8 million worth. These moves are intriguing to say the least, as aggregate hedge fund interest stayed the same (this is a bearish signal in our experience).
Let's now review hedge fund activity in other stocks similar to CMS Energy Corporation (NYSE:CMS). These stocks are Nasdaq, Inc. (NASDAQ:NDAQ), The Cooper Companies, Inc. (NYSE:COO), D.R. Horton, Inc. (NYSE:DHI), and CDW Corporation (NASDAQ:CDW). This group of stocks' market valuations are closest to CMS's market valuation.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position NDAQ,20,115423,4 COO,28,983218,0 DHI,47,2948879,1 CDW,29,1244470,1 Average,31,1322998,1.5 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 31 hedge funds with bullish positions and the average amount invested in these stocks was $1323 million. That figure was $666 million in CMS's case. D.R. Horton, Inc. (NYSE:DHI) is the most popular stock in this table. On the other hand Nasdaq, Inc. (NASDAQ:NDAQ) is the least popular one with only 20 bullish hedge fund positions. CMS Energy Corporation (NYSE:CMS) is not the least popular stock in this group but hedge fund interest is still below average. Our calculations showed that top 20 most popular stocks among hedge funds returned 24.4% in 2019 through September 30th and outperformed the S&P 500 ETF (SPY) by 4 percentage points. A small number of hedge funds were also right about betting on CMS as the stock returned 11.2% during the same time frame and outperformed the market by an even larger margin.
Disclosure: None. This article was originally published at Insider Monkey.