A whopping number of 13F filings filed with U.S. Securities and Exchange Commission has been processed by Insider Monkey so that individual investors can look at the overall hedge fund sentiment towards the stocks included in their watchlists. These freshly-submitted public filings disclose money managers’ equity positions as of the end of the three-month period that ended December 31st, so let’s proceed with the discussion of the hedge fund sentiment on Xcel Energy Inc (NYSE:XEL).
Is XEL stock a buy? The best stock pickers were getting more bullish. The number of long hedge fund positions inched up by 6 in recent months. Xcel Energy Inc (NYSE:XEL) was in 28 hedge funds’ portfolios at the end of the fourth quarter of 2020. The all time high for this statistic is 24. This means the bullish number of hedge fund positions in this stock currently sits at its all time high. Our calculations also showed that XEL isn’t among the 30 most popular stocks among hedge funds (click for Q4 rankings).
In the financial world there are a large number of tools investors have at their disposal to grade stocks. A pair of the most under-the-radar tools are hedge fund and insider trading indicators. We have shown that, historically, those who follow the top picks of the best fund managers can outperform the broader indices by a solid amount. Insider Monkey’s monthly stock picks returned 197% since March 2017 and outperformed the S&P 500 ETFs by more than 124 percentage points. Our short strategy outperformed the S&P 500 short ETFs by 20 percentage points annually (see the details here). That’s why we believe hedge fund sentiment is a useful indicator that investors should pay attention to.
Cliff Asness of AQR Capital Management
At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, auto parts business is a recession resistant business, so we are taking a closer look at this discount auto parts stock that is growing at a 196% annualized rate. We go through lists like the 15 best micro-cap stocks to buy now 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 take a look at the new hedge fund action encompassing Xcel Energy Inc (NYSE:XEL).
Do Hedge Funds Think XEL Is A Good Stock To Buy Now?
At the end of the fourth quarter, a total of 28 of the hedge funds tracked by Insider Monkey were long this stock, a change of 27% from one quarter earlier. On the other hand, there were a total of 15 hedge funds with a bullish position in XEL a year ago. So, let’s find out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
The largest stake in Xcel Energy Inc (NYSE:XEL) was held by D E Shaw, which reported holding $66.9 million worth of stock at the end of December. It was followed by Point72 Asset Management with a $63 million position. Other investors bullish on the company included AQR Capital Management, Citadel Investment Group, and Renaissance Technologies. In terms of the portfolio weights assigned to each position Coann Capital allocated the biggest weight to Xcel Energy Inc (NYSE:XEL), around 8.18% of its 13F portfolio. Caxton Associates LP is also relatively very bullish on the stock, designating 0.61 percent of its 13F equity portfolio to XEL.
There weren’t any hedge funds initiating brand new positions in the stock during the fourth quarter.
Let’s also examine hedge fund activity in other stocks similar to Xcel Energy Inc (NYSE:XEL). We will take a look at Travelers Companies Inc (NYSE:TRV), DexCom, Inc. (NASDAQ:DXCM), Aptiv PLC (NYSE:APTV), Parker-Hannifin Corporation (NYSE:PH), Ford Motor Company (NYSE:F), Trane Technologies plc (NYSE:TT), and Centene Corporation (NYSE:CNC). All of these stocks’ market caps match XEL’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| TRV | 34 | 405824 | -1 |
| DXCM | 52 | 1664615 | -6 |
| APTV | 44 | 1354021 | 6 |
| PH | 56 | 1601655 | 5 |
| F | 41 | 1652221 | 3 |
| TT | 34 | 998785 | -3 |
| CNC | 56 | 2646289 | -2 |
| Average | 45.3 | 1474773 | 0.3 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 45.3 hedge funds with bullish positions and the average amount invested in these stocks was $1475 million. That figure was $290 million in XEL’s case. Parker-Hannifin Corporation (NYSE:PH) is the most popular stock in this table. On the other hand Travelers Companies Inc (NYSE:TRV) is the least popular one with only 34 bullish hedge fund positions. Compared to these stocks Xcel Energy Inc (NYSE:XEL) is even less popular than TRV. Our overall hedge fund sentiment score for XEL is 40. 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. Hedge funds dodged a bullet by taking a bearish stance towards XEL. Our calculations showed that the top 30 most popular hedge fund stocks returned 81.2% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 26 percentage points. These stocks gained 12.3% in 2021 through April 19th but managed to beat the market again by 0.9 percentage points. Unfortunately XEL wasn’t nearly as popular as these 30 stocks (hedge fund sentiment was very bearish); XEL investors were disappointed as the stock returned 6.5% since the end of the fourth quarter (through 4/19) 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 since 2019.
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Disclosure: None. This article was originally published at Insider Monkey.
