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. We at Insider Monkey have plowed through 823 13F filings that hedge funds and well-known value investors are required to file by the SEC. The 13F filings show the funds’ and investors’ portfolio positions as of June 30th, when the S&P 500 Index was trading around the 3100 level. Stocks kept going up since then. In this article we look at how hedge funds traded Duke Energy Corporation (NYSE:DUK) and determine whether the smart money was really smart about this stock.
Duke Energy Corporation (NYSE:DUK) shareholders have witnessed a decrease in activity from the world’s largest hedge funds in recent months. Duke Energy Corporation (NYSE:DUK) was in 33 hedge funds’ portfolios at the end of June. The all time high for this statistics is 37. There were 35 hedge funds in our database with DUK positions at the end of the first quarter. Our calculations also showed that DUK isn’t among the 30 most popular stocks among hedge funds (click for Q2 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.
In the financial world there are a large number of tools investors have at their disposal to grade stocks. A pair of the most under-the-radar tools are hedge fund and insider trading indicators. We have shown that, historically, those who follow the top picks of the best fund managers can outperform the broader indices by a solid amount. Insider Monkey’s monthly stock picks returned 101% since March 2017 and outperformed the S&P 500 ETFs by more than 56 percentage points. Our short strategy outperformed the S&P 500 short ETFs by 20 percentage points annually (see the details here). That’s why we believe hedge fund sentiment is a useful indicator that investors should pay attention to.
John Overdeck of Two Sigma Advisors
At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, this “mom” trader turned $2000 into $2 million within 2 years. So, we are checking out her best trade idea of the month. Cannabis stocks are roaring back in 2020, which is why we are also checking out this under-the-radar stock. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. We go through lists like the 10 most profitable companies in the world 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. Keeping this in mind we’re going to take a glance at the fresh hedge fund action surrounding Duke Energy Corporation (NYSE:DUK).
Hedge fund activity in Duke Energy Corporation (NYSE:DUK)
At the end of the second quarter, a total of 33 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -6% from the first quarter of 2020. On the other hand, there were a total of 32 hedge funds with a bullish position in DUK a year ago. With hedge funds’ positions undergoing their usual ebb and flow, there exists an “upper tier” of notable hedge fund managers who were increasing their stakes considerably (or already accumulated large positions).
More specifically, Renaissance Technologies was the largest shareholder of Duke Energy Corporation (NYSE:DUK), with a stake worth $222.3 million reported as of the end of September. Trailing Renaissance Technologies was Two Sigma Advisors, which amassed a stake valued at $140.4 million. Citadel Investment Group, D E Shaw, and AQR Capital 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 Claar Advisors allocated the biggest weight to Duke Energy Corporation (NYSE:DUK), around 4.73% of its 13F portfolio. Stevens Capital Management is also relatively very bullish on the stock, setting aside 3.1 percent of its 13F equity portfolio to DUK.
Judging by the fact that Duke Energy Corporation (NYSE:DUK) has witnessed falling interest from hedge fund managers, it’s safe to say that there exists a select few hedgies that decided to sell off their entire stakes by the end of the second quarter. At the top of the heap, Jos Shaver’s Electron Capital Partners dumped the largest investment of the “upper crust” of funds monitored by Insider Monkey, worth close to $59.1 million in stock. Clint Carlson’s fund, Carlson Capital, also dumped its stock, about $14.1 million worth. These transactions are intriguing to say the least, as total hedge fund interest was cut by 2 funds by the end of the second quarter.
Let’s go over hedge fund activity in other stocks – not necessarily in the same industry as Duke Energy Corporation (NYSE:DUK) but similarly valued. These stocks are Activision Blizzard, Inc. (NASDAQ:ATVI), CME Group Inc (NASDAQ:CME), Micron Technology, Inc. (NASDAQ:MU), Chubb Limited (NYSE:CB), Ecolab Inc. (NYSE:ECL), Takeda Pharmaceutical Company Limited (NYSE:TAK), and U.S. Bancorp (NYSE:USB). This group of stocks’ market values are closest to DUK’s market value.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| ATVI | 97 | 3564560 | -4 |
| CME | 60 | 2336649 | -2 |
| MU | 84 | 4285777 | -10 |
| CB | 40 | 1288157 | 7 |
| ECL | 46 | 2099678 | 8 |
| TAK | 18 | 790266 | -4 |
| USB | 48 | 6299135 | -3 |
| Average | 56.1 | 2952032 | -1.1 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 56.1 hedge funds with bullish positions and the average amount invested in these stocks was $2952 million. That figure was $907 million in DUK’s case. Activision Blizzard, Inc. (NASDAQ:ATVI) is the most popular stock in this table. On the other hand Takeda Pharmaceutical Company Limited (NYSE:TAK) is the least popular one with only 18 bullish hedge fund positions. Duke Energy Corporation (NYSE:DUK) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for DUK is 39.3. 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 10 most popular stocks among hedge funds returned 41.4% in 2019 and outperformed the S&P 500 ETF (SPY) by 10.1 percentage points. These stocks gained 33% in 2020 through the end of August and surpassed the market by 23.2 percentage points. Unfortunately DUK wasn’t nearly as popular as these 10 stocks (hedge fund sentiment was quite bearish); DUK investors were disappointed as the stock returned 1.7% since Q2 and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 10 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.
