- Oops!Something went wrong.Please try again later.
Last year we predicted the arrival of the first US recession since 2009 and we told in advance 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 Consolidated Edison, Inc. (NYSE:ED).
Is Consolidated Edison, Inc. (NYSE:ED) the right investment to pursue these days? Hedge funds were becoming hopeful. The number of long hedge fund positions improved by 8 recently. Consolidated Edison, Inc. (NYSE:ED) was in 30 hedge funds' portfolios at the end of the second quarter of 2021. The all time high for this statistic is 32. Our calculations also showed that ED isn't among the 30 most popular stocks among hedge funds (click for Q2 rankings). There were 22 hedge funds in our database with ED holdings at the end of March.
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. Keeping this in mind let's check out the new hedge fund action surrounding Consolidated Edison, Inc. (NYSE:ED).
Do Hedge Funds Think ED Is A Good Stock To Buy Now?
Heading into the third quarter of 2021, a total of 30 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 36% from the previous quarter. The graph below displays the number of hedge funds with bullish position in ED over the last 24 quarters. So, let's see which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
More specifically, Zimmer Partners was the largest shareholder of Consolidated Edison, Inc. (NYSE:ED), with a stake worth $234.7 million reported as of the end of June. Trailing Zimmer Partners was AQR Capital Management, which amassed a stake valued at $71.4 million. Citadel Investment Group, Marshall Wace LLP, and Citadel Investment Group 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 Consolidated Edison, Inc. (NYSE:ED), around 3.16% of its 13F portfolio. Pinz Capital is also relatively very bullish on the stock, earmarking 2.37 percent of its 13F equity portfolio to ED.
As one would reasonably expect, key money managers were leading the bulls' herd. D E Shaw, managed by D. E. Shaw, assembled the largest position in Consolidated Edison, Inc. (NYSE:ED). D E Shaw had $24.1 million invested in the company at the end of the quarter. Daniel S. Och's OZ Management also initiated a $12.3 million position during the quarter. The other funds with brand new ED positions are Matthew L Pinz's Pinz Capital, Michael Gelband's ExodusPoint Capital, and Steve Cohen's Point72 Asset Management.
Let's go over hedge fund activity in other stocks - not necessarily in the same industry as Consolidated Edison, Inc. (NYSE:ED) but similarly valued. We will take a look at Realty Income Corporation (NYSE:O), DTE Energy Company (NYSE:DTE), ZTO Express (Cayman) Inc. (NYSE:ZTO), Enphase Energy Inc (NASDAQ:ENPH), Royalty Pharma Plc (NASDAQ:RPRX), Credit Suisse Group AG (NYSE:CS), and ONEOK, Inc. (NYSE:OKE). This group of stocks' market valuations are closest to ED's market valuation.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position O,23,221703,5 DTE,32,469838,6 ZTO,21,983038,6 ENPH,44,724397,-5 RPRX,20,1557037,-6 CS,10,136568,-3 OKE,26,178712,6 Average,25.1,610185,1.3 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 25.1 hedge funds with bullish positions and the average amount invested in these stocks was $610 million. That figure was $533 million in ED's case. Enphase Energy Inc (NASDAQ:ENPH) is the most popular stock in this table. On the other hand Credit Suisse Group AG (NYSE:CS) is the least popular one with only 10 bullish hedge fund positions. Consolidated Edison, Inc. (NYSE:ED) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for ED is 67.5. 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. Hedge funds were also right about betting on ED as the stock returned 4.9% since the end of Q2 (through 10/15) and outperformed the market. Hedge funds were rewarded for their relative bullishness.
Get real-time email alerts: Follow Consolidated Edison Inc (NYSE:ED)
Disclosure: None. This article was originally published at Insider Monkey.