At Insider Monkey, we pore over the filings of nearly 750 top investment firms every quarter, a process we have now completed for the latest reporting period. The data we've gathered as a result gives us access to a wealth of collective knowledge based on these firms' portfolio holdings as of June 28. In this article, we will use that wealth of knowledge to determine whether or not Dominion Energy, Inc. (NYSE:D) makes for a good investment right now.
Dominion Energy, Inc. (NYSE:D) was in 39 hedge funds' portfolios at the end of June. D investors should pay attention to an increase in hedge fund interest lately. There were 36 hedge funds in our database with D holdings at the end of the previous quarter. Our calculations also showed that D isn't among the 30 most popular stocks among hedge funds.
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' large-cap stock picks indeed failed to beat the market between 1999 and 2016. However, we were able to identify in advance a select group of hedge fund holdings that outperformed the market by 40 percentage points since May 2014 through May 30, 2019 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that'll significantly underperform the market. We have been tracking and sharing the list of these stocks since February 2017 and they lost 25.7% through September 30, 2019. That's why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
[caption id="attachment_728376" align="aligncenter" width="473"] Jonathan Barrett of Luminus Management[/caption]
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 analyze the fresh hedge fund action regarding Dominion Energy, Inc. (NYSE:D).
How have hedgies been trading Dominion Energy, Inc. (NYSE:D)?
At Q2's end, a total of 39 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 8% from one quarter earlier. The graph below displays the number of hedge funds with bullish position in D over the last 16 quarters. With hedgies' capital changing hands, there exists a few noteworthy hedge fund managers who were increasing their holdings significantly (or already accumulated large positions).
More specifically, Zimmer Partners was the largest shareholder of Dominion Energy, Inc. (NYSE:D), with a stake worth $260.2 million reported as of the end of March. Trailing Zimmer Partners was Citadel Investment Group, which amassed a stake valued at $171.7 million. Weiss Asset Management, AQR Capital Management, and Luminus Management were also very fond of the stock, giving the stock large weights in their portfolios.
Consequently, key money managers were leading the bulls' herd. D E Shaw, managed by David E. Shaw, initiated the most valuable position in Dominion Energy, Inc. (NYSE:D). D E Shaw had $65.3 million invested in the company at the end of the quarter. OZ Management also initiated a $56.3 million position during the quarter. The other funds with new positions in the stock are Israel Englander's Millennium Management, and John M. Angelo and Michael L. Gordon's Angelo Gordon & Co.
Let's check out hedge fund activity in other stocks - not necessarily in the same industry as Dominion Energy, Inc. (NYSE:D) but similarly valued. These stocks are Mitsubishi UFJ Financial Group, Inc. (NYSE:MUFG), CIGNA Corporation (NYSE:CI), Intuitive Surgical, Inc. (NASDAQ:ISRG), and Boston Scientific Corporation (NYSE:BSX). This group of stocks' market caps resemble D's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position MUFG,12,65234,-2 CI,48,2664032,1 ISRG,37,994131,-3 BSX,50,2980786,3 Average,36.75,1676046,-0.25 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 36.75 hedge funds with bullish positions and the average amount invested in these stocks was $1676 million. That figure was $1228 million in D's case. Boston Scientific Corporation (NYSE:BSX) is the most popular stock in this table. On the other hand Mitsubishi UFJ Financial Group, Inc.(NYSE:MUFG) is the least popular one with only 12 bullish hedge fund positions. Dominion Energy, Inc. (NYSE:D) is not the most popular stock in this group but hedge fund interest is still above 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. Hedge funds were also right about betting on D as the stock returned 6% during the third quarter and outperformed the market. Hedge funds were rewarded for their relative bullishness. Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.
Disclosure: None. This article was originally published at Insider Monkey.