The Insider Monkey team has completed processing the quarterly 13F filings for the September quarter submitted by the hedge funds and other money managers included in our extensive database. Most hedge fund investors experienced strong gains on the back of a strong market performance, which certainly propelled them to adjust their equity holdings so as to maintain the desired risk profile. As a result, the relevancy of these public filings and their content is indisputable, as they may reveal numerous high-potential stocks. The following article will discuss the smart money sentiment towards Xcel Energy Inc (NYSE:XEL).
Is XEL a good stock to buy now? Xcel Energy Inc (NYSE:XEL) investors should be aware of a decrease in activity from the world's largest hedge funds of late. Xcel Energy Inc (NYSE:XEL) was in 22 hedge funds' portfolios at the end of the third quarter of 2020. The all time high for this statistic is 24. There were 23 hedge funds in our database with XEL positions at the end of the second quarter. Our calculations also showed that XEL 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.
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 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'll significantly underperform the market. We have been tracking and sharing the list of these stocks since February 2017 and they lost 13% through November 17th. That's why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
Ken Griffin of Citadel Investment Group
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. Now we're going to take a peek at the latest hedge fund action encompassing Xcel Energy Inc (NYSE:XEL).
Do Hedge Funds Think XEL Is A Good Stock To Buy Now?
Heading into the fourth quarter of 2020, a total of 22 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -4% from the second quarter of 2020. Below, you can check out the change in hedge fund sentiment towards XEL over the last 21 quarters. With the smart money's positions undergoing their usual ebb and flow, there exists a few noteworthy hedge fund managers who were increasing their stakes meaningfully (or already accumulated large positions).
Among these funds, Citadel Investment Group held the most valuable stake in Xcel Energy Inc (NYSE:XEL), which was worth $130.6 million at the end of the third quarter. On the second spot was AQR Capital Management which amassed $57.3 million worth of shares. D E Shaw, Adage Capital Management, and Athanor Capital 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 Athanor Capital allocated the biggest weight to Xcel Energy Inc (NYSE:XEL), around 0.68% of its 13F portfolio. Sciencast Management is also relatively very bullish on the stock, designating 0.58 percent of its 13F equity portfolio to XEL.
Seeing as Xcel Energy Inc (NYSE:XEL) has faced declining sentiment from hedge fund managers, it's easy to see that there lies a certain "tier" of funds that decided to sell off their entire stakes by the end of the third quarter. Intriguingly, Stuart J. Zimmer's Zimmer Partners cut the largest position of the "upper crust" of funds monitored by Insider Monkey, valued at an estimated $10.2 million in stock. Donald Sussman's fund, Paloma Partners, also dumped its stock, about $5.5 million worth. These moves are important to note, as aggregate hedge fund interest dropped by 1 funds by the end of the third quarter.
Let's now review hedge fund activity in other stocks - not necessarily in the same industry as Xcel Energy Inc (NYSE:XEL) but similarly valued. These stocks are The Blackstone Group Inc. (NYSE:BX), SBA Communications Corporation (NASDAQ:SBAC), Las Vegas Sands Corp. (NYSE:LVS), Baidu, Inc. (NASDAQ:BIDU), Ambev SA (NYSE:ABEV), Vodafone Group Plc (NASDAQ:VOD), and Twilio Inc. (NYSE:TWLO). This group of stocks' market caps are similar to XEL's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position BX,49,1296447,2 SBAC,43,1761058,-14 LVS,47,2190985,0 BIDU,43,2804691,-6 ABEV,21,347744,8 VOD,22,677025,6 TWLO,71,3474887,5 Average,42.3,1793262,0.1 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 42.3 hedge funds with bullish positions and the average amount invested in these stocks was $1793 million. That figure was $356 million in XEL's case. Twilio Inc. (NYSE:TWLO) is the most popular stock in this table. On the other hand Ambev SA (NYSE:ABEV) is the least popular one with only 21 bullish hedge fund positions. Xcel Energy Inc (NYSE:XEL) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for XEL is 32.5. 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 XEL wasn't nearly as popular as these 20 stocks (hedge fund sentiment was quite bearish); XEL investors were disappointed as the stock returned -5.8% 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.