Does DTE Energy Company (NYSE:DTE) represent a good buying opportunity at the moment? Let’s quickly check the hedge fund interest towards the company. Hedge fund firms constantly search out bright intellectuals and highly-experienced employees and throw away millions of dollars on satellite photos and other research activities, so it is no wonder why they tend to generate millions in profits each year. It is also true that some hedge fund players fail inconceivably on some occasions, but net net their stock picks have been generating superior risk-adjusted returns on average over the years.
Why do we pay any attention at all to hedge fund sentiment? 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.
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. We're going to view the recent hedge fund action regarding DTE Energy Company (NYSE:DTE).
What does smart money think about DTE Energy Company (NYSE:DTE)?
At the end of the second quarter, a total of 28 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 12% from the first quarter of 2019. By comparison, 20 hedge funds held shares or bullish call options in DTE a year ago. With hedge funds' sentiment swirling, there exists a few notable hedge fund managers who were upping their holdings significantly (or already accumulated large positions).
More specifically, AQR Capital Management was the largest shareholder of DTE Energy Company (NYSE:DTE), with a stake worth $215.2 million reported as of the end of March. Trailing AQR Capital Management was Renaissance Technologies, which amassed a stake valued at $168.2 million. Citadel Investment Group, Carlson Capital, and GLG Partners were also very fond of the stock, giving the stock large weights in their portfolios.
With a general bullishness amongst the heavyweights, key hedge funds have been driving this bullishness. Balyasny Asset Management, managed by Dmitry Balyasny, assembled the largest position in DTE Energy Company (NYSE:DTE). Balyasny Asset Management had $5.8 million invested in the company at the end of the quarter. Paul Marshall and Ian Wace's Marshall Wace LLP also initiated a $4.9 million position during the quarter. The following funds were also among the new DTE investors: Perella Weinberg Partners, Steve Cohen's Point72 Asset Management, and Bruce Kovner's Caxton Associates LP.
Let's check out hedge fund activity in other stocks - not necessarily in the same industry as DTE Energy Company (NYSE:DTE) but similarly valued. These stocks are Lululemon Athletica inc. (NASDAQ:LULU), Pinduoduo Inc. (NASDAQ:PDD), TAL Education Group (NYSE:TAL), and United Airlines Holdings, Inc. (NASDAQ:UAL). This group of stocks' market values match DTE's market value.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position LULU,49,1803118,7 PDD,29,459170,-3 TAL,25,1185511,0 UAL,47,6715542,-2 Average,37.5,2540835,0.5 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 37.5 hedge funds with bullish positions and the average amount invested in these stocks was $2541 million. That figure was $664 million in DTE's case. Lululemon Athletica inc. (NASDAQ:LULU) is the most popular stock in this table. On the other hand TAL Education Group (NYSE:TAL) is the least popular one with only 25 bullish hedge fund positions. DTE Energy Company (NYSE:DTE) 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 (see the video below) 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 DTE, though not to the same extent, as the stock returned 4.7% during the third quarter and outperformed the market. 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.