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. Insider Monkey finished processing more than 750 13F filings submitted by hedge funds and prominent investors. These filings show these funds’ portfolio positions as of September 30th, 2019. In this article we are going to take a look at smart money sentiment towards Consolidated Edison, Inc. (NYSE:ED).
Consolidated Edison, Inc. (NYSE:ED) investors should pay attention to a decrease in hedge fund sentiment in recent months. Our calculations also showed that ED isn’t among the 30 most popular stocks among hedge funds (click for Q3 rankings and see the video below for Q2 rankings).
Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.
In today’s marketplace there are tons of metrics investors put to use to value stocks. A couple of the most innovative metrics are hedge fund and insider trading moves. Our researchers have shown that, historically, those who follow the best picks of the elite money managers can outclass the market by a solid amount (see the details here).
John Overdeck of Two Sigma Advisors
Unlike the largest US hedge funds that are convinced Dow will soar past 40,000 or the world’s most bearish hedge fund that’s more convinced than ever that a crash is coming, our long-short investment strategy doesn’t rely on bull or bear markets to deliver double digit returns. We only rely on the best performing hedge funds‘ buy/sell signals. Let’s check out the recent hedge fund action surrounding Consolidated Edison, Inc. (NYSE:ED).
How are hedge funds trading Consolidated Edison, Inc. (NYSE:ED)?
At the end of the third quarter, a total of 22 of the hedge funds tracked by Insider Monkey were long this stock, a change of -15% from the second quarter of 2019. By comparison, 11 hedge funds held shares or bullish call options in ED a year ago. So, let’s review which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
The largest stake in Consolidated Edison, Inc. (NYSE:ED) was held by AQR Capital Management, which reported holding $515 million worth of stock at the end of September. It was followed by Renaissance Technologies with a $404.4 million position. Other investors bullish on the company included D E Shaw, Two Sigma Advisors, and ExodusPoint Capital. In terms of the portfolio weights assigned to each position ExodusPoint Capital allocated the biggest weight to Consolidated Edison, Inc. (NYSE:ED), around 2.26% of its 13F portfolio. Luminus Management is also relatively very bullish on the stock, setting aside 1.36 percent of its 13F equity portfolio to ED.
Because Consolidated Edison, Inc. (NYSE:ED) has faced falling interest from the aggregate hedge fund industry, it’s easy to see that there was a specific group of fund managers that decided to sell off their positions entirely heading into Q4. Interestingly, Stuart J. Zimmer’s Zimmer Partners said goodbye to the biggest position of the “upper crust” of funds tracked by Insider Monkey, worth about $57.8 million in stock, and Clint Carlson’s Carlson Capital was right behind this move, as the fund cut about $36.5 million worth. These transactions are intriguing to say the least, as aggregate hedge fund interest dropped by 4 funds heading into Q4.
Let’s also examine hedge fund activity in other stocks – not necessarily in the same industry as Consolidated Edison, Inc. (NYSE:ED) but similarly valued. We will take a look at TE Connectivity Ltd. (NYSE:TEL), Newmont Goldcorp Corporation (NYSE:NEM), Canadian Pacific Railway Limited (NYSE:CP), and Royal Bank of Scotland Group plc (NYSE:RBS). This group of stocks’ market valuations resemble ED’s market valuation.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| TEL | 30 | 1265055 | 3 |
| NEM | 41 | 868131 | 0 |
| CP | 31 | 1781495 | 1 |
| RBS | 5 | 29381 | -1 |
| Average | 26.75 | 986016 | 0.75 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 26.75 hedge funds with bullish positions and the average amount invested in these stocks was $986 million. That figure was $1396 million in ED’s case. Newmont Goldcorp Corporation (NYSE:NEM) is the most popular stock in this table. On the other hand Royal Bank of Scotland Group plc (NYSE:RBS) is the least popular one with only 5 bullish hedge fund positions. Consolidated Edison, Inc. (NYSE:ED) 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. Our calculations showed that top 20 most popular stocks among hedge funds returned 37.4% in 2019 through the end of November and outperformed the S&P 500 ETF (SPY) by 9.9 percentage points. Unfortunately ED wasn’t nearly as popular as these 20 stocks (hedge fund sentiment was quite bearish); ED investors were disappointed as the stock returned -7.2% during the first two months of the fourth quarter and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 20 most popular stocks among hedge funds as 70 percent of these stocks already outperformed the market in Q4.
Disclosure: None. This article was originally published at Insider Monkey.
