Hedge Funds Are Betting On NextEra Energy, Inc. (NEE)

Before we spend countless hours researching a company, we like to analyze what insiders, hedge funds and billionaire investors think of the stock first. This is a necessary first step in our investment process because our research has shown that the elite investors’ consensus returns have been exceptional. In the following paragraphs, we find out what the billionaire investors and hedge funds think of NextEra Energy, Inc. (NYSE:NEE).

Is NextEra Energy, Inc. (NYSE:NEE) going to take off soon? Money managers were in an optimistic mood. The number of long hedge fund positions advanced by 2 recently. NextEra Energy, Inc. (NYSE:NEE) was in 63 hedge funds’ portfolios at the end of March. The all time high for this statistic is 64. Our calculations also showed that NEE isn’t among the 30 most popular stocks among hedge funds (click for Q1 rankings).

Hedge funds’ reputation as shrewd investors has been tarnished in the last decade as their hedged returns couldn’t keep up with the unhedged returns of the market indices. Hedge funds have more than $3.5 trillion in assets under management, so you can’t expect their entire portfolios to beat the market by large margins. Our research was able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by more than 115 percentage points since March 2017 (see the details here). So you can still find a lot of gems by following hedge funds’ moves today.

Peter Rathjens of Arrowstreet Capital

At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, advertising technology one of the fastest growing industries right now, so we are checking out stock pitches like this under-the-radar adtech stock that can deliver 10x gains. We go through lists like the 10 best hydrogen fuel cell stocks to pick the next Tesla that will deliver a 10x return. Even though we recommend positions in only a tiny fraction of the companies we analyze, we check out as many stocks as we can. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. You can subscribe to our free daily newsletter on our homepage. With all of this in mind let’s analyze the recent hedge fund action surrounding NextEra Energy, Inc. (NYSE:NEE).

Do Hedge Funds Think NEE Is A Good Stock To Buy Now?

At first quarter’s end, a total of 63 of the hedge funds tracked by Insider Monkey were long this stock, a change of 3% from the previous quarter. Below, you can check out the change in hedge fund sentiment towards NEE over the last 23 quarters. So, let’s review which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

More specifically, Fisher Asset Management was the largest shareholder of NextEra Energy, Inc. (NYSE:NEE), with a stake worth $1028.8 million reported as of the end of March. Trailing Fisher Asset Management was D E Shaw, which amassed a stake valued at $188.6 million. Millennium Management, AQR Capital Management, and Citadel Investment Group 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 Engine No. 1 LLC allocated the biggest weight to NextEra Energy, Inc. (NYSE:NEE), around 5.24% of its 13F portfolio. Quaero Capital is also relatively very bullish on the stock, earmarking 3.57 percent of its 13F equity portfolio to NEE.

As industrywide interest jumped, key money managers have jumped into NextEra Energy, Inc. (NYSE:NEE) headfirst. Islet Management, managed by Joseph Samuels, initiated the biggest position in NextEra Energy, Inc. (NYSE:NEE). Islet Management had $15.1 million invested in the company at the end of the quarter. Louis Bacon’s Moore Global Investments also made a $8.9 million investment in the stock during the quarter. The other funds with new positions in the stock are John Overdeck and David Siegel’s Two Sigma Advisors, Andrew Weiss’s Weiss Asset Management, and Peter Rathjens, Bruce Clarke and John Campbell’s Arrowstreet Capital.

Let’s now take a look at hedge fund activity in other stocks similar to NextEra Energy, Inc. (NYSE:NEE). We will take a look at United Parcel Service, Inc. (NYSE:UPS), Union Pacific Corporation (NYSE:UNP), Unilever PLC (NYSE:UL), Linde plc (NYSE:LIN), BHP Group (NYSE:BBL), Morgan Stanley (NYSE:MS), and SAP SE (NYSE:SAP). This group of stocks’ market caps are closest to NEE’s market cap.

View table here if you experience formatting issues.

As you can see these stocks had an average of 43.3 hedge funds with bullish positions and the average amount invested in these stocks was $2801 million. That figure was $2726 million in NEE’s case. Morgan Stanley (NYSE:MS) is the most popular stock in this table. On the other hand SAP SE (NYSE:SAP) is the least popular one with only 19 bullish hedge fund positions. NextEra Energy, Inc. (NYSE:NEE) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for NEE is 73.2. 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 positive signal but we’d rather spend our time researching stocks that hedge funds are piling on. Our calculations showed that top 5 most popular stocks among hedge funds returned 95.8% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 40 percentage points. These stocks gained 17.2% in 2021 through June 11th and beat the market again by 3.3 percentage points. Unfortunately NEE wasn’t nearly as popular as these 5 stocks and hedge funds that were betting on NEE were disappointed as the stock returned -2.3% since the end of March (through 6/11) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 5 most popular stocks among hedge funds as many of these stocks already outperformed the market since 2019.

Disclosure: None. This article was originally published at Insider Monkey.