Insider Monkey has processed numerous 13F filings of hedge funds and successful value investors to create an extensive database of hedge fund holdings. The 13F filings show the hedge funds' and successful investors' positions as of the end of the first quarter. You can find articles about an individual hedge fund's trades on numerous financial news websites. However, in this article we will take a look at their collective moves over the last 4.5 years and analyze what the smart money thinks of DTE Energy Company (NYSE:DTE) based on that data.
Is DTE Energy Company (NYSE:DTE) a buy here? Hedge funds are reducing their bets on the stock. The number of long hedge fund bets retreated by 6 recently. Our calculations also showed that DTE isn't among the 30 most popular stocks among hedge funds (click for Q1 rankings and see the video for a quick look at the top 5 stocks). DTE was in 29 hedge funds' portfolios at the end of the first quarter of 2020. There were 35 hedge funds in our database with DTE holdings at the end of the previous quarter. Video: Watch our video about the top 5 most popular hedge fund stocks.
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 58 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.
[caption id="attachment_26029" align="aligncenter" width="398"] Steven Cohen of Point72 Asset Management[/caption]
We leave no stone unturned when looking for the next great investment idea. For example, we believe electric vehicles and energy storage are set to become giant markets, and we want to take advantage of the declining lithium prices amid the COVID-19 pandemic. So we are checking out investment opportunities like these. We interview hedge fund managers and ask them about their best ideas. If you want to find out the best healthcare stock to buy right now, you can watch our latest hedge fund manager interview here. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. Our best call in 2020 was shorting the market when the S&P 500 was trading at 3150 after realizing the coronavirus pandemic’s significance before most investors. With all of this in mind we're going to go over the latest hedge fund action surrounding DTE Energy Company (NYSE:DTE).
Hedge fund activity in DTE Energy Company (NYSE:DTE)
Heading into the second quarter of 2020, a total of 29 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -17% from the fourth quarter of 2019. On the other hand, there were a total of 25 hedge funds with a bullish position in DTE a year ago. With hedgies' positions undergoing their usual ebb and flow, there exists a select group of notable hedge fund managers who were upping their stakes substantially (or already accumulated large positions).
Of the funds tracked by Insider Monkey, Citadel Investment Group, managed by Ken Griffin, holds the most valuable position in DTE Energy Company (NYSE:DTE). Citadel Investment Group has a $172.5 million position in the stock, comprising 0.1% of its 13F portfolio. On Citadel Investment Group's heels is AQR Capital Management, led by Cliff Asness, holding a $82 million position; the fund has 0.1% of its 13F portfolio invested in the stock. Other professional money managers that are bullish contain John Overdeck and David Siegel's Two Sigma Advisors, D. E. Shaw's D E Shaw and Israel Englander's Millennium Management. In terms of the portfolio weights assigned to each position Yaupon Capital allocated the biggest weight to DTE Energy Company (NYSE:DTE), around 3.9% of its 13F portfolio. Highbridge Capital Management is also relatively very bullish on the stock, designating 3.65 percent of its 13F equity portfolio to DTE.
Seeing as DTE Energy Company (NYSE:DTE) has experienced falling interest from the aggregate hedge fund industry, logic holds that there lies a certain "tier" of hedge funds that elected to cut their full holdings in the first quarter. At the top of the heap, Stuart J. Zimmer's Zimmer Partners said goodbye to the largest investment of the 750 funds monitored by Insider Monkey, comprising an estimated $129.9 million in stock, and Clint Carlson's Carlson Capital was right behind this move, as the fund dropped about $60.2 million worth. These moves are interesting, as aggregate hedge fund interest dropped by 6 funds in the first quarter.
Let's now review hedge fund activity in other stocks - not necessarily in the same industry as DTE Energy Company (NYSE:DTE) but similarly valued. We will take a look at Delta Air Lines, Inc. (NYSE:DAL), AmerisourceBergen Corporation (NYSE:ABC), Chipotle Mexican Grill, Inc. (NYSE:CMG), and Cintas Corporation (NASDAQ:CTAS). All of these stocks' market caps are closest to DTE's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position DAL,53,2970479,-17 ABC,41,634674,1 CMG,48,2674255,0 CTAS,42,458144,-3 Average,46,1684388,-4.75 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 46 hedge funds with bullish positions and the average amount invested in these stocks was $1684 million. That figure was $517 million in DTE's case. Delta Air Lines, Inc. (NYSE:DAL) is the most popular stock in this table. On the other hand AmerisourceBergen Corporation (NYSE:ABC) is the least popular one with only 41 bullish hedge fund positions. Compared to these stocks DTE Energy Company (NYSE:DTE) is even less popular than ABC. Hedge funds dodged a bullet by taking a bearish stance towards DTE. Our calculations showed that the top 10 most popular hedge fund stocks returned 41.4% in 2019 and outperformed the S&P 500 ETF (SPY) by 10.1 percentage points. These stocks gained 8.3% in 2020 through the end of May but managed to beat the market by 13.2 percentage points. Unfortunately DTE wasn't nearly as popular as these 10 stocks (hedge fund sentiment was very bearish); DTE investors were disappointed as the stock returned 13.3% during the second quarter (through the end of May) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 10 most popular stocks among hedge funds as most of these stocks already outperformed the market so far in 2020.
Disclosure: None. This article was originally published at Insider Monkey.