Is DTE Energy Company (NYSE:DTE) a good investment right now? We check hedge fund and billionaire investor sentiment before delving into hours of research. Hedge funds spend millions of dollars on Ivy League graduates, expert networks, and get tips from investment bankers and industry insiders. Sure they sometimes fail miserably but historically their consensus stock picks outperformed the market after adjusting for known risk factors.
DTE Energy Company (NYSE:DTE) has experienced a decrease in hedge fund interest lately and our calculations also showed that DTE isn’t among the 30 most popular stocks among hedge funds. However, hedge fund sentiment towards DTE is near its all time high and still very bullish.
Hedge funds’ reputation as shrewd investors has been tarnished in the last decade as their hedged returns couldn’t keep up with the unhedged returns of the market indices. 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 32 percentage points since May 2014 through March 12, 2019 (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 27.5% through March 12, 2019. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
We’re going to check out the key hedge fund action encompassing DTE Energy Company (NYSE:DTE).
How have hedgies been trading DTE Energy Company (NYSE:DTE)?
At the end of the fourth quarter, a total of 23 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -8% from one quarter earlier. Below, you can check out the change in hedge fund sentiment towards DTE over the last 14 quarters. With the smart money’s sentiment swirling, there exists a few noteworthy hedge fund managers who were boosting their holdings considerably (or already accumulated large positions).
More specifically, Renaissance Technologies was the largest shareholder of DTE Energy Company (NYSE:DTE), with a stake worth $314.8 million reported as of the end of September. Trailing Renaissance Technologies was AQR Capital Management, which amassed a stake valued at $116.9 million. Citadel Investment Group, GLG Partners, and D E Shaw were also very fond of the stock, giving the stock large weights in their portfolios.
Since DTE Energy Company (NYSE:DTE) has witnessed falling interest from hedge fund managers, it’s easy to see that there lies a certain “tier” of fund managers who were dropping their positions entirely by the end of the third quarter. Intriguingly, Phill Gross and Robert Atchinson’s Adage Capital Management sold off the largest position of all the hedgies watched by Insider Monkey, comprising close to $25.6 million in stock. Matthew Tewksbury’s fund, Stevens Capital Management, also cut its stock, about $13.4 million worth. These transactions are interesting, as aggregate hedge fund interest fell by 2 funds by the end of the third quarter.
Let’s now review hedge fund activity in other stocks – not necessarily in the same industry as DTE Energy Company (NYSE:DTE) but similarly valued. These stocks are Sun Life Financial Inc. (NYSE:SLF), PACCAR Inc (NASDAQ:PCAR), Imperial Oil Limited (NYSE:IMO), and Fresenius Medical Care AG & Co. KGaA (NYSE:FMS). This group of stocks’ market caps are closest to DTE’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| SLF | 10 | 83989 | -3 |
| PCAR | 19 | 153846 | -1 |
| IMO | 19 | 94926 | 2 |
| FMS | 8 | 39834 | 2 |
| Average | 14 | 93149 | 0 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 14 hedge funds with bullish positions and the average amount invested in these stocks was $93 million. That figure was $562 million in DTE’s case. PACCAR Inc (NASDAQ:PCAR) is the most popular stock in this table. On the other hand Fresenius Medical Care AG & Co. KGaA (NYSE:FMS) is the least popular one with only 8 bullish hedge fund positions. Compared to these stocks DTE Energy Company (NYSE:DTE) is more popular among hedge funds. Our calculations showed that top 15 most popular stocks among hedge funds returned 19.7% through March 15th and outperformed the S&P 500 ETF (SPY) by 6.6 percentage points. Hedge funds were also right about betting on DTE, though not to the same extent, as the stock returned 13.3% and outperformed the market as well.
Disclosure: None. This article was originally published at Insider Monkey.
