Is DUK Stock A Buy or Sell?

Many prominent investors, including Warren Buffett, David Tepper and Stan Druckenmiller, have been cautious regarding the current bull market and missed out as the stock market reached another high in recent weeks. On the other hand, technology hedge funds weren’t timid and registered double digit market beating gains. Financials, energy and industrial stocks initially suffered the most but many of these stocks delivered strong returns since November and hedge funds actually increased their positions in these stocks. In this article we will find out how hedge fund sentiment towards Duke Energy Corporation (NYSE:DUK) changed recently.

Is DUK stock a buy or sell? Money managers were getting more optimistic. The number of long hedge fund positions increased by 2 in recent months. Duke Energy Corporation (NYSE:DUK) was in 38 hedge funds’ portfolios at the end of December. The all time high for this statistic is 37. This means the bullish number of hedge fund positions in this stock currently sits at its all time high. Our calculations also showed that DUK isn’t among the 30 most popular stocks among hedge funds (click for Q4 rankings).

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 was able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by more than 124 percentage points since March 2017 (see the details here).

Bruce Kovner of Caxton Associates LP

At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, the House passed a landmark bill decriminalizing marijuana. So, we are checking out this under the radar cannabis stock right now. We go through lists like the 10 best battery stocks to buy to identify the next stock with 10x upside potential. Even though we recommend positions in only a tiny fraction of the companies we analyze, we check out as many stocks as we can. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. You can subscribe to our free daily newsletter on our website. Keeping this in mind let’s go over the new hedge fund action encompassing Duke Energy Corporation (NYSE:DUK).

Do Hedge Funds Think DUK Is A Good Stock To Buy Now?

At the end of December, a total of 38 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 6% from the third quarter of 2020. On the other hand, there were a total of 37 hedge funds with a bullish position in DUK a year ago. So, let’s check out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

The largest stake in Duke Energy Corporation (NYSE:DUK) was held by D E Shaw, which reported holding $139.1 million worth of stock at the end of December. It was followed by AQR Capital Management with a $75.7 million position. Other investors bullish on the company included Two Sigma Advisors, Adage Capital Management, and Citadel Investment Group. In terms of the portfolio weights assigned to each position Claar Advisors allocated the biggest weight to Duke Energy Corporation (NYSE:DUK), around 3.99% of its 13F portfolio. Jones Road Capital Management is also relatively very bullish on the stock, setting aside 1.76 percent of its 13F equity portfolio to DUK.

Now, specific money managers have been driving this bullishness. Caxton Associates LP, managed by Bruce Kovner, created the biggest position in Duke Energy Corporation (NYSE:DUK). Caxton Associates LP had $8.8 million invested in the company at the end of the quarter. Nicholas Bagnall’s Te Ahumairangi Investment Management also initiated a $4.9 million position during the quarter. The other funds with new positions in the stock are Aaron Wertentheil’s Jones Road Capital Management, Qing Li’s Sciencast Management, and Renee Yao’s Neo Ivy Capital.

Let’s now take a look at hedge fund activity in other stocks – not necessarily in the same industry as Duke Energy Corporation (NYSE:DUK) but similarly valued. These stocks are Autodesk, Inc. (NASDAQ:ADSK), The Sherwin-Williams Company (NYSE:SHW), The Bank of Nova Scotia (NYSE:BNS), CME Group Inc (NASDAQ:CME), NetEase, Inc (NASDAQ:NTES), The Southern Company (NYSE:SO), and Enbridge Inc (NYSE:ENB). This group of stocks’ market caps are closest to DUK’s market cap.

View table here if you experience formatting issues.

As you can see these stocks had an average of 41.4 hedge funds with bullish positions and the average amount invested in these stocks was $1724 million. That figure was $615 million in DUK’s case. Autodesk, Inc. (NASDAQ:ADSK) is the most popular stock in this table. On the other hand The Bank of Nova Scotia (NYSE:BNS) is the least popular one with only 19 bullish hedge fund positions. Duke Energy Corporation (NYSE:DUK) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for DUK is 57.2. Stocks with higher number of hedge fund positions relative to other stocks as well as relative to their historical range receive a higher sentiment score. 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 30 most popular stocks among hedge funds returned 81.2% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 26 percentage points. These stocks gained 5.3% in 2021 through March 19th and surpassed the market again by 0.8 percentage points. Unfortunately DUK wasn’t nearly as popular as these 30 stocks (hedge fund sentiment was quite bearish); DUK investors were disappointed as the stock returned 2.3% since the end of December (through 3/19) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 30 most popular stocks among hedge funds as most of these stocks already outperformed the market in 2020.

Disclosure: None. This article was originally published at Insider Monkey.