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 have processed the filings of the more than 700 world-class investment firms that we track and now have access to the collective wisdom contained in these filings, which are based on their September 30 holdings, data that is available nowhere else. Should you consider Xcel Energy Inc (NASDAQ:XEL) for your portfolio? We’ll look to this invaluable collective wisdom for the answer.
Xcel Energy Inc (NASDAQ:XEL) investors should be aware of an increase in activity from the world’s largest hedge funds lately. XEL was in 21 hedge funds’ portfolios at the end of the third quarter of 2018. There were 18 hedge funds in our database with XEL positions at the end of the previous quarter. Our calculations also showed that XEL isn’t among the 30 most popular stocks among hedge funds.
Why do we pay any attention at all to hedge fund sentiment? Our research has shown that hedge funds’ large-cap stock picks indeed failed to beat the market between 1999 and 2016. However, we were able to identify in advance a select group of hedge fund holdings that outperformed the market by 18 percentage points since May 2014 through December 3, 2018 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that’ll significantly underperform the market. We have been tracking and sharing the list of these stocks since February 2017 and they lost 24% through December 3, 2018. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
We’re going to take a look at the key hedge fund action encompassing Xcel Energy Inc (NASDAQ:XEL).
How are hedge funds trading Xcel Energy Inc (NASDAQ:XEL)?
At the end of the third quarter, a total of 21 of the hedge funds tracked by Insider Monkey were long this stock, a change of 17% from the second quarter of 2018. Below, you can check out the change in hedge fund sentiment towards XEL over the last 13 quarters. With hedge funds’ capital changing hands, there exists an “upper tier” of noteworthy hedge fund managers who were upping their holdings considerably (or already accumulated large positions).
Among these funds, Renaissance Technologies held the most valuable stake in Xcel Energy Inc (NASDAQ:XEL), which was worth $167.9 million at the end of the third quarter. On the second spot was AQR Capital Management which amassed $72.8 million worth of shares. Moreover, Levin Capital Strategies, Millennium Management, and Adage Capital Management were also bullish on Xcel Energy Inc (NASDAQ:XEL), allocating a large percentage of their portfolios to this stock.
As aggregate interest increased, key money managers were leading the bulls’ herd. Levin Capital Strategies, managed by John A. Levin, established the most outsized position in Xcel Energy Inc (NASDAQ:XEL). Levin Capital Strategies had $58.7 million invested in the company at the end of the quarter. George Hall’s Clinton Group also made a $2.3 million investment in the stock during the quarter. The following funds were also among the new XEL investors: Glenn Russell Dubin’s Highbridge Capital Management, David Costen Haley’s HBK Investments, and Ken Fisher’s Fisher Asset Management.
Let’s now take a look at hedge fund activity in other stocks – not necessarily in the same industry as Xcel Energy Inc (NASDAQ:XEL) but similarly valued. These stocks are Hewlett Packard Enterprise Company (NYSE:HPE), Welltower Inc. (NYSE:WELL), Lam Research Corporation (NASDAQ:LRCX), and PACCAR Inc (NASDAQ:PCAR). This group of stocks’ market values resemble XEL’s market value.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| HPE | 30 | 1102518 | 2 |
| WELL | 18 | 401950 | -1 |
| LRCX | 34 | 1569377 | -9 |
| PCAR | 20 | 227359 | -1 |
| Average | 25.5 | 825301 | -2.25 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 25.5 hedge funds with bullish positions and the average amount invested in these stocks was $825 million. That figure was $456 million in XEL’s case. Lam Research Corporation (NASDAQ:LRCX) is the most popular stock in this table. On the other hand Welltower Inc. (NYSE:WELL) is the least popular one with only 18 bullish hedge fund positions. Xcel Energy Inc (NASDAQ:XEL) is not the least popular stock in this group but hedge fund interest is still below average. This is a slightly negative signal and we’d rather spend our time researching stocks that hedge funds are piling on. In this regard LRCX might be a better candidate to consider a long position.
Disclosure: None. This article was originally published at Insider Monkey.