Is CMS Energy Corporation (NYSE:CMS) a good equity to bet on right now? We like to check what the smart money thinks first before doing extensive research. Although there have been several high profile failed hedge fund picks, the consensus picks among hedge fund investors have historically outperformed the market after adjusting for known risk attributes. It’s not surprising given that hedge funds have access to better information and more resources to find the latest market-moving information.
CMS Energy Corporation (NYSE:CMS) was included in the 13F portfolios of 19 funds from our database at the end of September. The stock registered an increase in popularity during the third quarter. 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 Fastenal Company (NASDAQ:FAST), MGM Resorts International (NYSE:MGM), and Marathon Oil Corporation (NYSE:MRO) to gather more data points.
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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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Now, let’s check out the latest action encompassing CMS Energy Corporation (NYSE:CMS).
Hedge fund activity in CMS Energy Corporation (NYSE:CMS)
At Q3’s end, a total of 19 of the hedge funds tracked by Insider Monkey were long this stock, up by one fund over the quarter. With hedgies’ sentiment swirling, there exists a few key hedge fund managers who were upping their holdings significantly (or already accumulated large positions).
According to Insider Monkey’s hedge fund database, Israel Englander’s Millennium Management has the most valuable position in CMS Energy Corporation (NYSE:CMS), worth close to $312.7 million, amounting to 0.5% of its total 13F portfolio. On Millennium Management’s heels is AQR Capital Management, led by Cliff Asness, which holds a $46.4 million position; the fund has 0.1% of its 13F portfolio invested in the stock. Some other hedge funds and institutional investors that are bullish include Ken Griffin’s Citadel Investment Group, Jim Simons’ Renaissance Technologies, and Matthew Hulsizer’s PEAK6 Capital Management.
As industrywide interest jumped, key hedge funds were breaking ground themselves. Stevens Capital Management, led by Matthew Tewksbury, created the largest position in CMS Energy Corporation (NYSE:CMS). Stevens Capital Management had $3.9 million invested in the company at the end of the quarter. David Harding’s Winton Capital Management also initiated a $1.6 million position during the quarter. The other funds with brand new CMS positions are Michael Platt and William Reeves’s BlueCrest Capital Mgmt., Joel Greenblatt’s Gotham Asset Management, and Andrew Feldstein and Stephen Siderow’s Blue Mountain Capital.
Let’s now take a look at hedge fund activity in other stocks – not necessarily in the same industry as CMS Energy Corporation (NYSE:CMS) but similarly valued. We will take a look at Fastenal Company (NASDAQ:FAST), MGM Resorts International (NYSE:MGM), Marathon Oil Corporation (NYSE:MRO), and National-Oilwell Varco, Inc. (NYSE:NOV). This group of stocks’ market values are closest to CMS’s market value.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| FAST | 23 | 624673 | -1 |
| MGM | 53 | 2300675 | -6 |
| MRO | 22 | 213779 | -4 |
| NOV | 25 | 329212 | 1 |
As you can see these stocks had an average of 31 funds with bullish positions and the average amount invested in these stocks was $867 million. That figure was $395 million in CMS’s case. MGM Resorts International (NYSE:MGM) is the most popular stock in this table. On the other hand Marathon Oil Corporation (NYSE:MRO) is the least popular one with 22 bullish hedge fund positions. Compared to these stocks CMS Energy Corporation (NYSE:CMS) is even less popular than MRO. Considering that hedge funds aren’t fond of this stock in relation to other companies analyzed in this article, it may be a good idea to analyze it in detail and understand why the smart money isn’t behind this stock. This isn’t necessarily bad news. Although it is possible that hedge funds may think the stock is overpriced and view the stock as a short candidate, they may not be very familiar with the bullish thesis. In either case more research is warranted.
Disclosure: none
