We hate to say this but, we told you so. On February 27th we published an article with the title Recession is Imminent: We Need A Travel Ban NOW and predicted a US recession when the S&P 500 Index was trading at the 3150 level. We also told you to short the market and buy long-term Treasury bonds. Our article also called for a total international travel ban. While we were warning you, President Trump minimized the threat and failed to act promptly. As a result of his inaction, we will now experience a deeper recession (see why hell is coming).
In these volatile markets we scrutinize hedge fund filings to get a reading on which direction each stock might be going. 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 31, so let’s proceed with the discussion of the hedge fund sentiment on Dominion Energy, Inc. (NYSE:D).
Dominion Energy, Inc. (NYSE:D) investors should be aware of a decrease in hedge fund interest lately. Our calculations also showed that D isn’t among the 30 most popular stocks among hedge funds (click for Q4 rankings and see the video at the end of this article for Q3 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 41 percentage points since March 2017 (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 35.3% through March 3rd. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
Clint Carlson of Carlson Capital
Now let’s check out the latest hedge fund action surrounding Dominion Energy, Inc. (NYSE:D).
How are hedge funds trading Dominion Energy, Inc. (NYSE:D)?
Heading into the first quarter of 2020, a total of 37 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -18% from the previous quarter. The graph below displays the number of hedge funds with bullish position in D over the last 18 quarters. So, let’s find out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
More specifically, Citadel Investment Group was the largest shareholder of Dominion Energy, Inc. (NYSE:D), with a stake worth $172 million reported as of the end of September. Trailing Citadel Investment Group was Adage Capital Management, which amassed a stake valued at $128.6 million. AQR Capital Management, Electron Capital Partners, and Schonfeld Strategic Advisors were also very fond of the stock, becoming one of the largest hedge fund holders of the company. In terms of the portfolio weights assigned to each position Electron Capital Partners allocated the biggest weight to Dominion Energy, Inc. (NYSE:D), around 10.46% of its 13F portfolio. Shelter Harbor Advisors is also relatively very bullish on the stock, setting aside 3.67 percent of its 13F equity portfolio to D.
Because Dominion Energy, Inc. (NYSE:D) has witnessed declining sentiment from the entirety of the hedge funds we track, it’s safe to say that there exists a select few fund managers who sold off their full holdings last quarter. Intriguingly, Stuart J. Zimmer’s Zimmer Partners dumped the biggest investment of the 750 funds tracked by Insider Monkey, valued at close to $171.8 million in stock. Jonathan Barrett and Paul Segal’s fund, Luminus Management, also dropped its stock, about $19.9 million worth. These moves are interesting, as total hedge fund interest dropped by 8 funds last quarter.
Let’s go over hedge fund activity in other stocks similar to Dominion Energy, Inc. (NYSE:D). These stocks are Intuitive Surgical, Inc. (NASDAQ:ISRG), Intuit Inc. (NASDAQ:INTU), Vale SA (NYSE:VALE), and The Blackstone Group Inc. (NYSE:BX). All of these stocks’ market caps are similar to D’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| ISRG | 51 | 1118443 | 6 |
| INTU | 54 | 1701224 | -1 |
| VALE | 26 | 1762450 | -3 |
| BX | 47 | 1192894 | 5 |
| Average | 44.5 | 1443753 | 1.75 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 44.5 hedge funds with bullish positions and the average amount invested in these stocks was $1444 million. That figure was $773 million in D’s case. Intuit Inc. (NASDAQ:INTU) is the most popular stock in this table. On the other hand Vale SA (NYSE:VALE) is the least popular one with only 26 bullish hedge fund positions. Dominion Energy, Inc. (NYSE:D) is not the least popular stock in this group but hedge fund interest is still below average. Our calculations showed that top 10 most popular stocks among hedge funds returned 41.4% in 2019 and outperformed the S&P 500 ETF (SPY) by 10.1 percentage points. These stocks gained 1.0% in 2020 through May 1st but beat the market by 12.9 percentage points. A small number of hedge funds were also right about betting on D, though not to the same extent, as the stock returned -7.7% during the same time period and outperformed the market.
Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.
Disclosure: None. This article was originally published at Insider Monkey.
