2. NextEra Energy (NYSE:NEE)
Number of Hedge Fund Holders: 81
Market Capitalization as of August 20: $163.56 Billion
NextEra Energy (NYSE:NEE) operations are divided into two main businesses. The first is Florida Power & Light (FPL) which is the largest electric utility company in Florida and one of the largest in the United States. The second major business is NextEra Energy Resources (NEER) which is the world’s largest producer of renewable energy from wind and solar and is a global leader in battery storage. NEER focuses on developing, constructing, and operating long-term contracted assets primarily in the United States and Canada.
The company has over 20 years of experience in developing and operating several renewable projects and has a significant competitive edge over newer entrants. This expertise has enabled NEER to capture a substantial market share, holding 56% of the wind market in 2022 and 38% of the renewable market share from 2019 to 2022. As of 2023, NEER has a clean energy portfolio of around 34 GW of operational capacity, comprising 24 GW of wind energy, 7 GW of solar energy, 2 GW of nuclear energy, and 1 GW of battery storage spanning across 16 states in the U.S.
Almost 93% of NEER’s revenues are secured through long-term Power Purchase Agreements with major customers including data centers and technology companies which provide stable and predictable cash flows for the company. NEER’s financial performance is strong, with adjusted earnings growing by 10.8% in Q2 2024 due to new investments and an expanding renewables portfolio. Looking ahead, the company expects its earnings per share (EPS) to grow by 6-8% each year until 2027 and plans to increase its dividend payments by 10% each year.
In its second quarter investor letter, ClearBridge stated the following regarding NextEra Energy (NYSE:NEE):
“AI-related momentum was a key driver of performance in the second quarter, lifting the enablers in technology as well as holdings like renewable power producer NextEra Energy, Inc. (NYSE:NEE) that supply the increasing energy needs of data centers. Parts of the market lacking an AI connection, like our medical device holdings, underperformed despite no change to fundamentals. We have managed through several similar momentum periods over our tenure and have delivered long-term results for shareholders by staying true to an approach that emphasizes diversification across three buckets of growth companies (select, stable and cyclical) and seeks to take advantage of attractive entry points into quality growth businesses.”
NextEra Energy’s (NYSE:NEE) renewable business is poised for continuous growth due to its dominant position, strong financials, and strategic position. As of August 20, the company is valued at $163.56 billion. As of the second quarter, NextEra Energy’s (NYSE:NEE) stock is held by 81 hedge funds with stakes worth $2.10 billion. GQG Partners is the largest shareholder in the company and has stocks worth $884.56 million as of June 30.
