Do Hedge Funds Love Duke Energy Corp (DUK)?

Is Duke Energy Corp (NYSE:DUK) a good stock to buy right now? We, at Insider Monkey, like to examine what billionaires and hedge funds think of a company before doing days of research on it. Given their 2 and 20 payment structure, hedge funds have more resources than the average investor. The funds have access to expert networks and get tips from industry insiders. They also have numerous Ivy League graduates and MBAs. Like everyone else, hedge funds perform miserably at times, but their consensus picks have historically outperformed the market after risk adjustments.

Duke Energy Corp (NYSE:DUK) was in 22 hedge funds’ portfolios at the end of September. Duke Energy Corp (NYSE:DUK) shareholders have witnessed an increase in hedge fund interest recently. There were 21 hedge funds in our database with Duke Energy Corp (NYSE:DUK) positions at the end of the previous quarter. The level and the change in hedge fund popularity aren’t the only variables you need to analyze to decipher hedge funds’ perspectives. A stock may witness a boost in popularity, but it may still be less popular than similarly priced stocks. That’s why at the end of this article, we will examine companies such as Target Corporation (NYSE:TGT), BlackRock, Inc. (NYSE:BLK), and HDFC Bank Limited (ADR) (NYSE:HDB) to gather more data points.

In today’s marketplace there are several metrics investors employ to appraise stocks. A couple of the most useful metrics are hedge fund and insider trading interest. Our researchers have shown that, historically, those who follow the best picks of the elite hedge fund managers can trounce the broader indices by a healthy amount (see the details here).

Now, let’s analyze the new action surrounding Duke Energy Corp (NYSE:DUK).

How are hedge funds trading Duke Energy Corp (NYSE:DUK)?

At the end of September, a total of 22 of the hedge funds tracked by Insider Monkey were bullish on this stock, an increase of 5% from the second quarter. With hedgies’ capital changing hands, there exists a few notable hedge fund managers who were upping their stakes considerably (or already accumulated large positions).

According to Insider Monkey’s hedge fund database, Jonathan Barrett and Paul Segal’s Luminus Management has the biggest position in Duke Energy Corp (NYSE:DUK), worth close to $229.6 million, comprising 7.1% of its total 13F portfolio. The second most bullish fund manager is Renaissance Technologies, holding a $220.5 million position; 0.5% of its 13F portfolio is allocated to the stock. Hedge funds and other institutional investors with similar optimism consist of Michael Messner’s Seminole Capital (Investment Mgmt), Cliff Asness’ AQR Capital Management, and D E Shaw.

Consequently, key hedge funds were leading the bulls’ herd. Electron Capital Partners, managed by Jos Shaver, initiated the most valuable position in Duke Energy Corp (NYSE:DUK). Electron Capital Partners had $1.9 million invested in the company at the end of the quarter. Ben Levine, Andrew Manuel and Stefan Renold’s LMR Partners also made a $1 million investment in the stock during the quarter. The following funds were also among the new DUK investors: Paul Marshall and Ian Wace’s Marshall Wace LLP, Dmitry Balyasny’s Balyasny Asset Management, and Jacob Gottlieb’s Visium Asset Management.

Let’s also examine hedge fund activity in other stocks – not necessarily in the same industry as Duke Energy Corp (NYSE:DUK) but similarly valued. We will take a look at Target Corporation (NYSE:TGT), BlackRock, Inc. (NYSE:BLK), HDFC Bank Limited (ADR) (NYSE:HDB), and The Dow Chemical Company (NYSE:DOW). This group of stocks’ market values matches Duke Energy Corp (NYSE:DUK)’s market value.

As you can see, these stocks had an average of 41 hedge funds with bullish positions and the average amount invested in these stocks was $2.22 billion. That figure was $646 million in Duke Energy Corp (NYSE:DUK)’s case. The Dow Chemical Company (NYSE:DOW) is the most popular stock in this table. On the other hand, HDFC Bank Limited (ADR) (NYSE:HDB) is the least popular one with only 29 bullish hedge fund positions. Compared to these stocks, Duke Energy Corp (NYSE:DUK) is even less popular than HDFC Bank Limited (ADR) (NYSE:HDB). Considering that hedge funds aren’t fond of this stock in relation to other companies analyzed in this article, it may be a good idea to analyze it in detail and understand why the smart money isn’t behind this stock. This isn’t necessarily bad news. Although it is possible that hedge funds may think the stock is overpriced and view the stock as a short candidate, they may not be very familiar with the bullish thesis. In either case, more research is warranted.