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 Dominion Energy Inc. (NYSE:D).
Is Dominion Energy Inc. (NYSE:D) a healthy stock for your portfolio? Hedge funds are getting less bullish. The number of long hedge fund bets dropped by 3 in recent months. Our calculations also showed that D 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.
Today there are dozens of tools stock market investors use to appraise stocks. Some of the best tools are hedge fund and insider trading indicators. Our experts have shown that, historically, those who follow the best picks of the elite investment managers can outclass their index-focused peers by a significant amount (see the details here).
[caption id="attachment_25857" align="aligncenter" width="359"] George Soros of Soros Fund Management[/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 trades like this one. 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. Now we're going to review the latest hedge fund action surrounding Dominion Energy Inc. (NYSE:D).
How are hedge funds trading Dominion Energy Inc. (NYSE:D)?
At the end of the first quarter, a total of 34 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -8% from the fourth quarter of 2019. The graph below displays the number of hedge funds with bullish position in D over the last 18 quarters. So, let's review which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
The largest stake in Dominion Energy Inc. (NYSE:D) was held by Renaissance Technologies, which reported holding $94.4 million worth of stock at the end of September. It was followed by AQR Capital Management with a $78.8 million position. Other investors bullish on the company included Adage Capital Management, D E Shaw, and Citadel Investment Group. In terms of the portfolio weights assigned to each position Ecofin Ltd allocated the biggest weight to Dominion Energy Inc. (NYSE:D), around 2.93% of its 13F portfolio. Beech Hill Partners is also relatively very bullish on the stock, earmarking 1.38 percent of its 13F equity portfolio to D.
Judging by the fact that Dominion Energy Inc. (NYSE:D) has witnessed falling interest from the smart money, logic holds that there was a specific group of money managers who were dropping their full holdings heading into Q4. Intriguingly, Jos Shaver's Electron Capital Partners dumped the biggest stake of all the hedgies monitored by Insider Monkey, comprising an estimated $87.6 million in stock. Ryan Tolkin (CIO)'s fund, Schonfeld Strategic Advisors, also dumped its stock, about $69.9 million worth. These bearish behaviors are intriguing to say the least, as total hedge fund interest fell by 3 funds heading into Q4.
Let's check out hedge fund activity in other stocks similar to Dominion Energy Inc. (NYSE:D). We will take a look at Crown Castle International Corp. (REIT) (NYSE:CCI), Intuit Inc. (NASDAQ:INTU), S&P Global Inc. (NYSE:SPGI), and Prologis Inc (NYSE:PLD). This group of stocks' market values are similar to D's market value.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position CCI,40,1640829,2 INTU,54,1557455,0 SPGI,73,2586131,-3 PLD,40,450612,5 Average,51.75,1558757,1 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 51.75 hedge funds with bullish positions and the average amount invested in these stocks was $1559 million. That figure was $371 million in D's case. S&P Global Inc. (NYSE:SPGI) is the most popular stock in this table. On the other hand Crown Castle International Corp. (REIT) (NYSE:CCI) is the least popular one with only 40 bullish hedge fund positions. Compared to these stocks Dominion Energy Inc. (NYSE:D) is even less popular than CCI. Hedge funds dodged a bullet by taking a bearish stance towards D. 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 D wasn't nearly as popular as these 10 stocks (hedge fund sentiment was very bearish); D investors were disappointed as the stock returned 17.8% 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.