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The latest 13F reporting period has come and gone, and Insider Monkey is again at the forefront when it comes to making use of this gold mine of data. Insider Monkey finished processing 817 13F filings submitted by hedge funds and prominent investors. These filings show these funds' portfolio positions as of September 30th, 2020. What do these smart investors think about Eversource Energy (NYSE:ES)?
Eversource Energy (NYSE:ES) shareholders have witnessed a decrease in hedge fund interest in recent months. Eversource Energy (NYSE:ES) was in 20 hedge funds' portfolios at the end of the third quarter of 2020. The all time high for this statistic is 28. Our calculations also showed that ES isn't among the 30 most popular stocks among hedge funds (click for Q3 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.
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 66 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.
Ryan Tolkin, CIO of Schonfeld Strategic Advisors
At Insider Monkey we scour multiple sources to uncover the next great investment idea. For example, Federal Reserve has been creating trillions of dollars electronically to keep the interest rates near zero. We believe this will lead to inflation and boost real estate prices. So, we recommended this real estate stock to our monthly premium newsletter subscribers. We go through lists like the 15 best blue chip stocks to pick the best large-cap stocks to buy. 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 website. With all of this in mind let's analyze the recent hedge fund action encompassing Eversource Energy (NYSE:ES).
Do Hedge Funds Think ES Is A Good Stock To Buy Now?
At the end of the third quarter, a total of 20 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -29% from the second quarter of 2020. By comparison, 22 hedge funds held shares or bullish call options in ES a year ago. So, let's review 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 Eversource Energy (NYSE:ES), with a stake worth $129.5 million reported as of the end of September. Trailing Zimmer Partners was D E Shaw, which amassed a stake valued at $62.3 million. AQR Capital Management, Two Sigma Advisors, and Millennium 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 Zimmer Partners allocated the biggest weight to Eversource Energy (NYSE:ES), around 2% of its 13F portfolio. Quantamental Technologies is also relatively very bullish on the stock, designating 0.95 percent of its 13F equity portfolio to ES.
Since Eversource Energy (NYSE:ES) has experienced falling interest from the aggregate hedge fund industry, we can see that there exists a select few money managers that decided to sell off their full holdings last quarter. At the top of the heap, Phill Gross and Robert Atchinson's Adage Capital Management cut the biggest stake of the 750 funds watched by Insider Monkey, totaling about $30.6 million in stock. Ken Griffin's fund, Citadel Investment Group, also cut its stock, about $17.3 million worth. These transactions are intriguing to say the least, as aggregate hedge fund interest was cut by 8 funds last quarter.
Let's now take a look at hedge fund activity in other stocks similar to Eversource Energy (NYSE:ES). We will take a look at CRH PLC (NYSE:CRH), Zimmer Biomet Holdings Inc (NYSE:ZBH), Chunghwa Telecom Co., Ltd (NYSE:CHT), ANSYS, Inc. (NASDAQ:ANSS), Moderna, Inc. (NASDAQ:MRNA), Kinder Morgan Inc (NYSE:KMI), and Alcon Inc. (NYSE:ALC). This group of stocks' market valuations are similar to ES's market valuation.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position CRH,7,61870,0 ZBH,55,1130301,-7 CHT,5,149365,1 ANSS,40,1456264,0 MRNA,32,690338,-5 KMI,46,939696,-4 ALC,26,676140,5 Average,30.1,729139,-1.4 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 30.1 hedge funds with bullish positions and the average amount invested in these stocks was $729 million. That figure was $308 million in ES's case. Zimmer Biomet Holdings Inc (NYSE:ZBH) is the most popular stock in this table. On the other hand Chunghwa Telecom Co., Ltd (NYSE:CHT) is the least popular one with only 5 bullish hedge fund positions. Eversource Energy (NYSE:ES) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for ES is 33.4. 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 20 most popular stocks among hedge funds returned 41.3% in 2019 and outperformed the S&P 500 ETF (SPY) by 10 percentage points. These stocks gained 30.7% in 2020 through December 14th and surpassed the market again by 15.8 percentage points. Unfortunately ES wasn't nearly as popular as these 20 stocks (hedge fund sentiment was quite bearish); ES investors were disappointed as the stock returned 2.3% since the end of September (through 12/14) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 20 most popular stocks among hedge funds as most of these stocks already outperformed the market in 2020.
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Disclosure: None. This article was originally published at Insider Monkey.