The utilities sector has inched up by merely 0.33% year-to-date compared to the SPDR S&P 500 ETF (SPY)’s gains of 2.5% during the same period. Two of the big utility bets of the more than 50 billionaires that we track at Insider Monkey are T-Mobile US Inc (NYSE:TMUS) and Williams Companies Inc (NYSE:WMB), each of which greatly outperformed their sector. NextEra Energy Inc (NYSE:NEE), which also saw considerable support from these high net-worth money managers, hasn’t fared as well however. We’ll take a look at these stocks and billionaires’ holdings in them in this article, based on the data we’ve compiled from the latest round of 13F filings.
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Most investors can’t outperform the stock market by individually picking stocks because stock returns aren’t evenly distributed. A randomly picked stock has only a 35% to 45% chance (depending on the investment horizon) to outperform the market. There are a few exceptions, one of which is when it comes to purchases made by corporate insiders. Academic research has shown that certain insider purchases historically outperformed the market by an average of seven percentage points per year. This effect is more pronounced in small-cap stocks. Another exception is the small-cap stock picks of hedge funds. Our research has shown that the 15 most popular small-cap stocks among hedge funds outperformed the market by nearly a percentage point per month between 1999 and 2012. We have been forward testing the performance of these stock picks since the end of August 2012 and they have returned more than 144% over the ensuing 32 months, outperforming the S&P 500 Index by nearly 85 percentage points (read the details here). The trick is focusing only on the best small-cap stock picks of funds, not their large-cap stock picks which are extensively covered by analysts and followed by almost everybody.
T-Mobile US Inc (NYSE:TMUS)’s stock is up by a staggering 43% year-to-date. The turnaround of the company seems to be working pretty well as it continues to fight with its rivals including AT&T Inc. (NYSE:T), Verizon Communications Inc. (NYSE:VZ), and Sprint Corp (NYSE:S) for market share. John Legere joined T-Mobile US Inc (NYSE:TMUS) as its CEO in September 2012 and implemented an ‘uncarrier’ approach for the company, which essentially involved a contract-free wireless network. The $29.73 billion company has increased its customers from 42 million at the end of 2012 to 56.8 million at the end of the first quarter of this year. A total of 10 billionaires had invested $1.83 billion in T-Mobile US Inc (NYSE:TMUS) by the end of March, as compared to 11 billionaires with $1.21 billion invested at the end of the previous quarter. John Paulson is one such investor, as he increased his fund Paulson & Co’s holding in T-Mobile US Inc (NYSE:TMUS) by 56% during the first quarter to 23.84 million shares valued at $755.65 million.
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Although down by nearly 5% so far this year, NextEra Energy Inc (NYSE:NEE) beat analysts’ estimates in its latest financial results. First quarter EPS of $1.41 was $0.14 ahead of expectations while $4.1 billion in revenues came out $210 million ahead of estimates. NextEra Energy Inc (NYSE:NEE) suffered weakened performance from its wind resources during the quarter, but that was offset by a better performance from its solar assets. Origination activity was also strong as the company’s subsidiary NextEra Energy Resources added 200 MW of wind projects and 300 MW of new solar projects to its renewables backlog.
Billionaire investors for NextEra Energy Inc (NYSE:NEE) increased to 9 with a total stake of $1.05 billion at the end of March, from 7 billionaires with $1 billion invested at the end of 2014. Israel Englander‘s Millennium Management increased its exposure to NextEra Energy Inc (NYSE:NEE) by 45% during the first quarter to nearly 4.38 million shares valued at $455.64 million.
Williams Companies Inc (NYSE:WMB) had the support of 8 billionaires, who had $1.29 billion invested in the company by the end of the first quarter of the year, as compared to the same total of 8 billionaires at the end of 2014, though they had much less capital invested at that time: $978.17 million. Stephen Mandel initiated a position in Williams Companies Inc (NYSE:WMB) for his fund Lone Pine Capital during the first quarter to the tune of 12.02 million shares valued at $607.85 million. Williams Companies Inc (NYSE:WMB)’s stock has risen by about 16.36% so far this year. The merger between Williams Partners L.P. (NYSE:WPZ), Williams Companies’ MLP subsidiary, and Access Midstream Partners was completed during the first quarter. Williams Companies Inc (NYSE:WMB) delivered a 14.3% earnings surprise in its first quarter financial results as its EPS of $0.16 beat estimates by $0.02.
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