Hedge Funds Aren’t Done Buying Eversource Energy (ES)
At the end of February we announced the arrival of the first US recession since 2009 and we predicted that the market will decline by at least 20% in (Recession is Imminent: We Need A Travel Ban NOW). In these volatile markets we scrutinize hedge fund filings to get a reading on which direction each stock might be going. In this article, we will take a closer look at hedge fund sentiment towards Eversource Energy (NYSE:ES).
Eversource Energy (NYSE:ES) shareholders have witnessed an increase in activity from the world's largest hedge funds lately. ES was in 26 hedge funds' portfolios at the end of March. There were 24 hedge funds in our database with ES holdings at the end of the previous quarter. Our calculations also showed that ES 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).
Video: Watch our video about the top 5 most popular hedge fund stocks.
According to most investors, hedge funds are seen as worthless, outdated investment tools of yesteryear. While there are over 8000 funds trading at the moment, Our experts hone in on the elite of this club, approximately 850 funds. These hedge fund managers command most of all hedge funds' total capital, and by paying attention to their highest performing investments, Insider Monkey has unsheathed numerous investment strategies that have historically outrun Mr. Market. Insider Monkey's flagship short hedge fund strategy surpassed the S&P 500 short ETFs by around 20 percentage points a year since its inception in March 2017. Our portfolio of short stocks lost 36% since February 2017 (through May 18th) even though the market was up 30% during the same period. We just shared a list of 8 short targets in our latest quarterly update .
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Ray Dalio of Bridgewater Associates[/caption]
At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, 2020’s unprecedented market conditions provide us with the highest number of trading opportunities in a decade. So we are checking out stocks recommended/scorned by legendary Bill Miller. 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. Keeping this in mind let's take a peek at the fresh hedge fund action surrounding Eversource Energy (NYSE:ES).
What does smart money think about Eversource Energy (NYSE:ES)?
At Q1's end, a total of 26 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 8% from the previous quarter. Below, you can check out the change in hedge fund sentiment towards ES over the last 18 quarters. So, let's see which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
Among these funds, Zimmer Partners held the most valuable stake in Eversource Energy (NYSE:ES), which was worth $187.7 million at the end of the third quarter. On the second spot was Renaissance Technologies which amassed $69.8 million worth of shares. AQR Capital Management, Millennium Management, and Adage Capital Management were also very fond of the stock, becoming one of the largest hedge fund holders of the company. In terms of the portfolio weights assigned to each position Zimmer Partners allocated the biggest weight to Eversource Energy (NYSE:ES), around 4.16% of its 13F portfolio. Sustainable Insight Capital Management is also relatively very bullish on the stock, setting aside 1.65 percent of its 13F equity portfolio to ES.
Consequently, key money managers were breaking ground themselves. ExodusPoint Capital, managed by Michael Gelband, assembled the most outsized position in Eversource Energy (NYSE:ES). ExodusPoint Capital had $6.2 million invested in the company at the end of the quarter. John Overdeck and David Siegel's Two Sigma Advisors also made a $3.9 million investment in the stock during the quarter. The other funds with new positions in the stock are Greg Eisner's Engineers Gate Manager, Richard SchimeláandáLawrence Sapanski's Cinctive Capital Management, and Ray Dalio's Bridgewater Associates.
Let's go over hedge fund activity in other stocks - not necessarily in the same industry as Eversource Energy (NYSE:ES) but similarly valued. We will take a look at Canadian Imperial Bank of Commerce (NYSE:CM), Brown-Forman Corporation (NYSE:BF), Cognizant Technology Solutions Corp (NASDAQ:CTSH), and Travelers Companies Inc (NYSE:TRV). All of these stocks' market caps match ES's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position CM,10,144510,-4 BF,28,482273,5 CTSH,38,2225496,-5 TRV,29,481539,-10 Average,26.25,833455,-3.5 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 26.25 hedge funds with bullish positions and the average amount invested in these stocks was $833 million. That figure was $461 million in ES's case. Cognizant Technology Solutions Corp (NASDAQ:CTSH) is the most popular stock in this table. On the other hand Canadian Imperial Bank of Commerce (NYSE:CM) is the least popular one with only 10 bullish hedge fund positions. Eversource Energy (NYSE:ES) 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 10 most popular stocks among hedge funds 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 and surpassed the market by 13.2 percentage points. Unfortunately ES wasn't nearly as popular as these 10 stocks (hedge fund sentiment was quite bearish); ES investors were disappointed as the stock returned 7.8% during the second quarter 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 in 2020.
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Disclosure: None. This article was originally published at Insider Monkey.
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