Hedge Funds Are Betting On Duke Energy Corp (DUK)

Is Duke Energy Corp (NYSE:DUK) a buy?

To many investors, hedge funds are perceived as bloated, outdated investment vehicles of an era lost to time. Although there are more than 8,000 hedge funds trading currently, Insider Monkey looks at the moguls of this club, about 525 funds. Analysts calculate that this group oversees the majority of the hedge fund industry’s total capital, and by watching their best stock picks, we’ve determined a number of investment strategies that have historically outstripped the S&P 500. Our small-cap hedge fund strategy beat the S&P 500 index by 18 percentage points per annum for a decade in our back tests, and since we’ve started sharing our picks with our subscribers at the end of August 2012, we have trumped the S&P 500 index by 33 percentage points in 11 months (find the details here).

Just as necessary, positive insider trading sentiment is another way to analyze the investments you’re interested in. As the old adage goes: there are plenty of motivations for a corporate insider to sell shares of his or her company, but just one, very clear reason why they would behave bullishly. Many academic studies have demonstrated the useful potential of this tactic if investors know where to look (learn more here).

Keeping this in mind, it’s important to analyze the recent info about Duke Energy Corp (NYSE:DUK).

What have hedge funds been doing with Duke Energy Corp (NYSE:DUK)?

At Q2’s end, a total of 22 of the hedge funds we track were long in this stock, a change of 22% from one quarter earlier. With the smart money’s positions undergoing their usual ebb and flow, there exists an “upper tier” of notable hedge fund managers who were upping their stakes meaningfully.

Out of the hedge funds we follow, Millennium Management, managed by Israel Englander, holds the most valuable position in Duke Energy Corp (NYSE:DUK). Millennium Management has a $134 million position in the stock, comprising 0.4% of its 13F portfolio. Coming in second is AQR Capital Management, managed by Cliff Asness, which held a $42.6 million position; 0.2% of its 13F portfolio is allocated to the company. Some other hedgies that hold long positions include John Burbank’s Passport Capital, Michael Messner’s Seminole Capital (Investment Mgmt) and D. E. Shaw’s D E Shaw.

As aggregate interest spiked, specific money managers have jumped into Duke Energy Corp (NYSE:DUK) headfirst. Millennium Management, managed by Israel Englander, established the largest position in Duke Energy Corp (NYSE:DUK). Millennium Management had 134 million invested in the company at the end of the quarter. Cliff Asness’s AQR Capital Management also made a $42.6 million investment in the stock during the quarter. The other funds with new positions in the stock are John Burbank’s Passport Capital, Michael Messner’s Seminole Capital (Investment Mgmt), and D. E. Shaw’s D E Shaw.

What have insiders been doing with Duke Energy Corp (NYSE:DUK)?

Insider buying is most useful when the company in focus has experienced transactions within the past half-year. Over the latest half-year time frame, Duke Energy Corp (NYSE:DUK) has experienced zero unique insiders buying, and zero insider sales (see the details of insider trades here).

We’ll also review the relationship between both of these indicators in other stocks similar to Duke Energy Corp (NYSE:DUK). These stocks are PG&E Corporation (NYSE:PCG), American Electric Power Company, Inc. (NYSE:AEP), NextEra Energy, Inc. (NYSE:NEE), Dominion Resources, Inc. (NYSE:D), and The Southern Company (NYSE:SO). This group of stocks belong to the electric utilities industry and their market caps are closest to DUK’s market cap.

Using the returns demonstrated by Insider Monkey’s studies, average investors should always keep one eye on hedge fund and insider trading activity, and Duke Energy Corp (NYSE:DUK) applies perfectly to this mantra.

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