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Where Do Hedge Funds Stand On Consolidated Edison, Inc. (ED)?

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  • ED

As we already know from media reports and hedge fund investor letters, hedge funds delivered their best returns in a decade. Most investors who decided to stick with hedge funds after a rough 2018 recouped their losses by the end of the fourth quarter of 2019. A significant number of hedge funds continued their strong performance in 2020 and 2021 as well. We get to see hedge funds' thoughts towards the market and individual stocks by aggregating their quarterly portfolio movements and reading their investor letters. In this article, we will particularly take a look at what hedge funds think about Consolidated Edison, Inc. (NYSE:ED).

Consolidated Edison, Inc. (NYSE:ED) investors should pay attention to a decrease in activity from the world's largest hedge funds lately. Consolidated Edison, Inc. (NYSE:ED) was in 22 hedge funds' portfolios at the end of the first 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 Q1 rankings).

Why do we pay any attention at all to hedge fund sentiment? Our research has shown that a select group of hedge fund holdings outperformed the S&P 500 ETFs by 115 percentage points since March 2017 (see the details here). That's why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.

Billionaire Ken Griffin's Top 10 Stocks Holdings
Billionaire Ken Griffin's Top 10 Stocks Holdings

Ken Griffin of Citadel Investment Group

At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, Chuck Schumer recently stated that marijuana legalization will be a Senate priority. So, we are checking out this under the radar stock that will benefit from this. We go through lists like the 10 best battery 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 we're going to go over the new hedge fund action regarding Consolidated Edison, Inc. (NYSE:ED).

Do Hedge Funds Think ED Is A Good Stock To Buy Now?

At first quarter's end, a total of 22 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -31% from one quarter earlier. The graph below displays the number of hedge funds with bullish position in ED over the last 23 quarters. With the smart money's sentiment swirling, there exists a few key hedge fund managers who were adding to their holdings significantly (or already accumulated large positions).

Is ED A Good Stock To Buy?
Is ED A Good Stock To Buy?

Among these funds, AQR Capital Management held the most valuable stake in Consolidated Edison, Inc. (NYSE:ED), which was worth $70.6 million at the end of the fourth quarter. On the second spot was Lansdowne Partners which amassed $45.9 million worth of shares. Citadel Investment Group, Citadel Investment Group, and Balyasny Asset 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 Coann Capital allocated the biggest weight to Consolidated Edison, Inc. (NYSE:ED), around 3.93% of its 13F portfolio. Lansdowne Partners is also relatively very bullish on the stock, dishing out 1.49 percent of its 13F equity portfolio to ED.

Since Consolidated Edison, Inc. (NYSE:ED) has experienced bearish sentiment from the aggregate hedge fund industry, it's safe to say that there is a sect of hedgies who sold off their full holdings heading into Q2. Intriguingly, Frank Fu's CaaS Capital cut the largest investment of the "upper crust" of funds followed by Insider Monkey, worth an estimated $52.9 million in stock. D. E. Shaw's fund, D E Shaw, also dropped its stock, about $14.5 million worth. These moves are important to note, as total hedge fund interest fell by 10 funds heading into Q2.

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. These stocks are Datadog, Inc. (NASDAQ:DDOG), Credit Suisse Group AG (NYSE:CS), TELUS Corporation (NYSE:TU), Etsy Inc (NASDAQ:ETSY), Garmin Ltd. (NASDAQ:GRMN), Sirius XM Holdings Inc (NASDAQ:SIRI), and Seagen Inc. (NASDAQ:SGEN). This group of stocks' market caps are closest to ED's market cap.

[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position DDOG,44,2383744,-8 CS,13,35775,2 TU,18,200045,4 ETSY,53,1645009,-3 GRMN,23,513329,-4 SIRI,24,570460,-8 SGEN,39,7467410,7 Average,30.6,1830825,-1.4 [/table]

View table here if you experience formatting issues.

As you can see these stocks had an average of 30.6 hedge funds with bullish positions and the average amount invested in these stocks was $1831 million. That figure was $197 million in ED's case. Etsy Inc (NASDAQ:ETSY) 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 13 bullish hedge fund positions. Consolidated Edison, Inc. (NYSE:ED) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for ED is 26.9. 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. 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 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 23.8% in 2021 through July 16th and surpassed the market again by 7.7 percentage points. Unfortunately ED wasn't nearly as popular as these 5 stocks (hedge fund sentiment was quite bearish); ED investors were disappointed as the stock returned 1.2% since the end of March (through 7/16) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 5 most popular stocks among hedge funds as most of these stocks already outperformed the market in 2021.

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Disclosure: None. This article was originally published at Insider Monkey.