Here’s What Smart Money Thinks about Dominion Resources, Inc. (D)

Reputable billionaire investors such as Nelson Peltz and David Tepper generate exorbitant profits for their wealthy accredited investors (a minimum of $1 million in investable assets would be required to invest in a hedge fund and most successful hedge funds won’t accept your savings unless you commit at least $5 million) by pinpointing winning small-cap stocks. There is little or no publicly-available information at all on some of these small companies, which makes it hard for an individual investor to pin down a winner within the small-cap space. However, hedge funds and other big asset managers can do the due diligence and analysis for you instead, thanks to their highly-skilled research teams and vast resources to conduct an appropriate evaluation process. Looking for potential winners within the small-cap galaxy of stocks? We believe following the smart money is a good starting point.

In this article, we are going to take a closer look at the latest hedge fund action surrounding Dominion Resources, Inc. (NYSE:D). Overall, the stock registered an increase in activity from smart money investors during the third quarter. At the end of September, 20 funds tracked by Insider Monkey held long positions in the stock, up from 18 funds a quarter earlier. The level and the change in hedge fund popularity aren’t the only variables you need to analyze to decipher hedge funds’ perspectives. A stock may witness a boost in popularity but it may still be less popular than similarly priced stocks. That’s why at the end of this article we will examine companies such as Express Scripts Holding Company (NASDAQ:ESRX), Adobe Systems Incorporated (NASDAQ:ADBE), and Telefonica S.A. (ADR) (NYSE:TEF) to gather more data points.

At Insider Monkey, we’ve developed an investment strategy that has delivered market-beating returns over the past 12 months. Our strategy identifies the 100 best-performing funds of the previous quarter from among the collection of 700+ successful funds that we track in our database, which we accomplish using our returns methodology. We then study the portfolios of those 100 funds using the latest 13F data to uncover the 30 most popular mid-cap stocks (market caps of between $1 billion and $10 billion) among them to hold until the next filing period. This strategy delivered 18% gains over the past 12 months, more than doubling the 8% returns enjoyed by the S&P 500 ETFs.

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With all of this in mind, let’s take a gander at the key action regarding Dominion Resources, Inc. (NYSE:D).

Hedge fund activity in Dominion Resources, Inc. (NYSE:D)

Heading into the fourth quarter of 2016, a total of 20 of the hedge funds tracked by Insider Monkey were long this stock, up by 11% from one quarter earlier. On the other hand, there were a total of 23 hedge funds with a bullish position in Dominion Resources at the beginning of this year. So, let’s review which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

When looking at the institutional investors followed by Insider Monkey, Zimmer Partners, led by Stuart J. Zimmer, holds the most valuable position in Dominion Resources, Inc. (NYSE:D). Zimmer Partners has a $100.5 million position in the stock, comprising 2.7% of its 13F portfolio. The second most bullish fund is Jim Simons’ Renaissance Technologies, with a $53.9 million position; 0.1% of its 13F portfolio is allocated to the stock. Remaining members of the smart money that are bullish include Jonathan Barrett and Paul Segal’s Luminus Management and Cliff Asness’ AQR Capital Management. We should note that two of these hedge funds (Zimmer Partners and Luminus Management) are among our list of the 100 best performing hedge funds, which is based on the performance of their 13F long positions in non-microcap stocks.

Now, specific money managers have jumped into Dominion Resources, Inc. (NYSE:D) headfirst. Zimmer Partners initiated the largest position in Dominion Resources, Inc. (NYSE:D). Dmitry Balyasny’s Balyasny Asset Management also made a $17.3 million investment in the stock during the third quarter. The other funds with brand new Dominion Resources positions are D. E. Shaw’s D E Shaw, Ken Griffin’s Citadel Investment Group, and Daniel S. Och’s OZ Management.

Let’s also examine hedge fund activity in other stocks – not necessarily in the same industry as Dominion Resources, Inc. (NYSE:D) but similarly valued. We will take a look at Express Scripts Holding Company (NASDAQ:ESRX), Adobe Systems Incorporated (NASDAQ:ADBE), Telefonica S.A. (ADR) (NYSE:TEF), and Petroleo Brasileiro Petrobras SA (ADR) (NYSE:PBR). This group of stocks’ market caps resemble D’s market cap.

As you can see these stocks had an average of 37 investors with bullish positions and the average amount invested in these stocks was $1.59 billion. That figure was $293 million in Dominion’s case. Adobe Systems Incorporated (NASDAQ:ADBE) is the most popular stock in this table. On the other hand Telefonica S.A. (ADR) (NYSE:TEF) is the least popular one with only 5 bullish hedge fund positions. Dominion Resources, Inc. (NYSE:D) 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 Adobe Systems Incorporated (NASDAQ:ADBE) might be a better candidate to consider taking a long position in.

Disclosure: none