With the second-quarter round of 13F filings behind us it is time to take a look at the stocks in which some of the best money managers in the world preferred to invest or sell heading into the third quarter of 2021. One of these stocks was Nextera Energy Partners LP (NYSE:NEP).
Nextera Energy Partners LP (NYSE:NEP) investors should be aware of an increase in hedge fund sentiment lately. Nextera Energy Partners LP (NYSE:NEP) was in 22 hedge funds’ portfolios at the end of the second quarter of 2021. The all time high for this statistic is 32. Our calculations also showed that NEP isn’t among the 30 most popular stocks among hedge funds (click for Q2 rankings).
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 185.4% since March 2017 and outperformed the S&P 500 ETFs by more than 79 percentage points (see the details here). That’s why we believe hedge fund sentiment is a useful indicator that investors should pay attention to.
Sander Gerber of Hudson Bay Capital
At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, lithium mining is one of the fastest growing industries right now, so we are checking out stock pitches like this emerging lithium stock. We go through lists like the 10 best EV 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. Keeping this in mind let’s take a glance at the latest hedge fund action regarding Nextera Energy Partners LP (NYSE:NEP).
Do Hedge Funds Think NEP Is A Good Stock To Buy Now?
At the end of the second quarter, a total of 22 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 29% from the first quarter of 2020. By comparison, 21 hedge funds held shares or bullish call options in NEP a year ago. With the smart money’s positions undergoing their usual ebb and flow, there exists a select group of notable hedge fund managers who were adding to their holdings significantly (or already accumulated large positions).
The largest stake in Nextera Energy Partners LP (NYSE:NEP) was held by Electron Capital Partners, which reported holding $69.1 million worth of stock at the end of June. It was followed by Citadel Investment Group with a $48.2 million position. Other investors bullish on the company included Inherent Group, GAMCO Investors, and Brasada Capital Management. In terms of the portfolio weights assigned to each position Electron Capital Partners allocated the biggest weight to Nextera Energy Partners LP (NYSE:NEP), around 3.34% of its 13F portfolio. Otter Creek Management is also relatively very bullish on the stock, earmarking 2.16 percent of its 13F equity portfolio to NEP.
As one would reasonably expect, key hedge funds were breaking ground themselves. Otter Creek Management, managed by Roger Keith Long, assembled the most valuable position in Nextera Energy Partners LP (NYSE:NEP). Otter Creek Management had $4.9 million invested in the company at the end of the quarter. George Soros’s Soros Fund Management also initiated a $1.2 million position during the quarter. The other funds with new positions in the stock are Michael Johnston’s Steelhead Partners, Sander Gerber’s Hudson Bay Capital Management, and Andrew Weiss’s Weiss Asset Management.
Let’s now take a look at hedge fund activity in other stocks similar to Nextera Energy Partners LP (NYSE:NEP). These stocks are CoreSite Realty Corp (NYSE:COR), Element Solutions Inc. (NYSE:ESI), Amkor Technology, Inc. (NASDAQ:AMKR), Q2 Holdings Inc (NYSE:QTWO), Alteryx, Inc. (NYSE:AYX), Integra Lifesciences Holdings Corp (NASDAQ:IART), and Nevro Corp (NYSE:NVRO). All of these stocks’ market caps resemble NEP’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| COR | 16 | 198819 | 1 |
| ESI | 23 | 682771 | -10 |
| AMKR | 19 | 154546 | -1 |
| QTWO | 19 | 208105 | -7 |
| AYX | 33 | 782027 | -2 |
| IART | 19 | 94167 | 6 |
| NVRO | 26 | 716353 | -3 |
| Average | 22.1 | 405255 | -2.3 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 22.1 hedge funds with bullish positions and the average amount invested in these stocks was $405 million. That figure was $171 million in NEP’s case. Alteryx, Inc. (NYSE:AYX) is the most popular stock in this table. On the other hand CoreSite Realty Corp (NYSE:COR) is the least popular one with only 16 bullish hedge fund positions. Nextera Energy Partners LP (NYSE:NEP) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for NEP is 48.3. 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. 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 24% in 2021 through October 22nd and still beat the market by 1.6 percentage points. A small number of hedge funds were also right about betting on NEP as the stock returned 9.4% since the end of the second quarter (through 10/22) and outperformed the market by an even larger margin.
Follow Nextera Energy Partners Lp (NYSE:NEP)
Follow Nextera Energy Partners Lp (NYSE:NEP)
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Disclosure: None. This article was originally published at Insider Monkey.
