Is Public Service Enterprise Group Inc. (PEG) a Good Stock to Buy?

The Insider Monkey team has completed processing the quarterly 13F filings for the September quarter submitted by the hedge funds and other money managers included in our extensive database. Most hedge funds have been producing disappointing net returns in recent years, however that was partly due to the poor performance of small-cap stocks in general. Well, small-cap stocks finally turned the corner and have been beating the large-cap stocks by more than 10 percentage points over the last 5 months.This means the relevancy of hedge funds’ public filings became inarguable, as they may reveal numerous high-potential stocks. The following article will discuss the smart money sentiment towards Public Service Enterprise Group Inc. (NYSE:PEG) .

Public Service Enterprise Group Inc. (NYSE:PEG) has seen a decrease in enthusiasm from smart money of late. At the end of September, 20 funds tracked by Insider Monkey held shares of the company, down from 22 funds with long positions a quarter earlier. However, 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 Zoetis Inc (NYSE:ZTS), Luxottica Group SpA (ADR) (NYSE:LUX), and Charter Communications, Inc. (NASDAQ:CHTR) 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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Now, let’s take a look at the fresh action encompassing Public Service Enterprise Group Inc. (NYSE:PEG).

How have hedgies been trading Public Service Enterprise Group Inc. (NYSE:PEG)?

At the end of September, 20 funds tracked by Insider Monkey held long positions in Public Service Enterprise Group, down by 9% over the quarter. On the other hand, there were a total of 23 hedge funds with a bullish position in PEG 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.

Of the funds tracked by Insider Monkey, Cliff Asness’ AQR Capital Management has the number one position in Public Service Enterprise Group Inc. (NYSE:PEG), worth close to $371.2 million, corresponding to 0.6% of its total 13F portfolio. On AQR Capital Management’s heels is Peter Rathjens, Bruce Clarke and John Campbell’s Arrowstreet Capital, with a $57.6 million position; 0.2% of its 13F portfolio is allocated to the stock. Other members of the smart money with similar optimism comprise Jonathan Barrett and Paul Segal’s Luminus Management, Stuart J. Zimmer’s Zimmer Partners and Jim Simons’s Renaissance Technologies. We should note that two of these hedge funds (Luminus Management and Zimmer Partners) 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.

We already know that not all hedge funds are bullish on the stock and some hedge funds actually cut their positions entirely. At the top of the heap, Israel Englander’s Millennium Management cut the biggest investment of the “upper crust” of funds studied by Insider Monkey, worth close to $30.4 million in call options, and Benjamin A. Smith’s Laurion Capital Management was right behind this move, as the fund cut about $3.6 million worth of shares.

Let’s go over hedge fund activity in other stocks similar to Public Service Enterprise Group Inc. (NYSE:PEG). We will take a look at Zoetis Inc (NYSE:ZTS), Luxottica Group SpA (ADR) (NYSE:LUX), Charter Communications, Inc. (NASDAQ:CHTR), and AutoZone, Inc. (NYSE:AZO). This group of stocks’ market valuations are similar to PEG’s market valuation.

As you can see these stocks had an average of 50 investors with long positions and the average amount invested in these stocks was $5.51 billion. That figure was just $605 million in PEG’s case. Charter Communications, Inc. (NASDAQ:CHTR) is the most popular stock in this table. On the other hand Luxottica Group SpA (ADR) (NYSE:LUX) is the least popular one with only 3 bullish hedge fund positions. Public Service Enterprise Group Inc. (NYSE:PEG) 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 Charter Communications, Inc. (NASDAQ:CHTR) might be a better candidate to consider taking a long position in.