Hedge Funds Have Never Been This Bullish On Dominion Energy, Inc. (D)


At Insider Monkey, we review every quarter the deposits of nearly 750 large investment companies, which we have now completed for the last reporting period. The data thus collected gives us access to a wealth of collective knowledge based on the portfolio holdings of these companies as at June 28th. In this article, we will use this wealth of knowledge to determine whether Dominion Energy, Inc.. (NYSE: D) is a good investment for the moment.

Dominion Energy, Inc. (NYSE: D) was in 39 hedge fund portfolios at the end of June. Investors should pay attention to an increase in the interest of hedge funds recently. Our database contained 36 hedge funds with holdings at the end of the previous quarter. Our calculations also showed that D is not among the 30 most popular hedge fund stocks.

The reputation of hedge funds as savvy investors has been tarnished over the last decade, as their hedged returns can not keep pace with the unhedged returns of market indices. Our research has shown that large-cap stocks in hedge funds did not 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 40 percentage points since May. 2014 to May 30, 2019 (see details here). We have also been able to identify in advance a selected group of hedge fund portfolios that would be significantly less efficient than the market. We have been tracking and sharing the list of these shares since February 2017 and they have lost 25.7% up to September 30, 2019. That is why we think that hedge fund sentiment is an extremely useful indicator to which investors should pay attention.

(caption id = "attachment_728376" align = "aligncenter" width = "473") Jonathan Barrett of Luminus Management (/ caption)

Jonathan Barrett Luminus Management
Jonathan Barrett Luminus Management

Unlike some fund managers who rely on Dow reaches 40,000 in one year, our long-short investment strategy does not rely on bull markets to generate double-digit returns We rely solely on buy / sell hedge fund signals. Let's look at the new hedge fund action for Dominion Energy, Inc. (NYSE: D).

How were the transactions traded with Dominion Energy, Inc. (NYSE: D)?

At the end of the second quarter, 39 hedge funds monitored by Insider Monkey held long positions in this security, an 8% change from the previous quarter. The chart below shows the number of hedge funds with a bullish position in D over the last 16 quarters. With the capital of hedgies changing hands, there are some outstanding hedge fund managers who have significantly increased their holdings (or have already accumulated significant positions).

No. of hedge funds with D positions
No. of hedge funds with D positions

Specifically, Zimmer Partners was the largest shareholder of Dominion Energy, Inc. (NYSE: D), with a $ 260.2 million equity interest reported at the end of March. The Citadel Investment Group, followed by Zimmer Partners, acquired a stake valued at $ 171.7 million. Weiss Asset Management, AQR Capital Management and Luminus Management were also very fond of the stock, which gave it a large weighting in their portfolios.

As a result, the main money managers led the herd of bulls. Dr. Shaw, led by David E. Shaw, has created the most valuable position within Dominion Energy, Inc. (NYSE: D). Dr. Shaw had invested $ 65.3 million in the business at the end of the quarter. OZ Management also initiated a position of $ 56.3 million during the quarter. Israel's Millennium Management Englander and Angelo Gordon & Co.'s John M. Angelo and Michael L. Gordon are among other funds that have new positions in the stock.

Let's take a look at the activity of hedge funds in other stocks – not necessarily in the same industry as Dominion Energy, Inc. (NYSE: D) but with a similar valuation. These shares are Mitsubishi UFJ Financial Group, Inc. (NYSE: MUFG), CIGNA Corporation (NYSE: CI), Intuitive Surgical, Inc. (NASDAQ: ISRG) and Boston Scientific Corporation (NYSE: BSX). The market capitalisations of this group of securities are similar to the market capitalization of D.

(table) Ticker, Number of FHs with Positions, Total Value of HF Positions (x1000), HF Position Change MUFG, 12.65234, -2 CI, 48.2664032.1 ISRG, 37.994131, -3 BSX, 50 , 2980786.3 Average, 36.75,1676046, -0.25 (/ table)

See the table here if you are having formatting problems.

As you can see, these funds had an average of 36.75 hedge funds with bullish positions and the average amount invested in these securities was $ 1,676 million. This figure was $ 1228 million in the case of D. Boston Scientific Corporation (NYSE: BSX) is the most popular stock in this chart. Mitsubishi UFJ Financial Group, Inc. (NYSE: MUFG) is the least popular, with only 12 bullish hedge fund positions. Dominion Energy, Inc. (NYSE: D) is not the most popular stock in this group, but hedge fund interest is still above average. Our calculations showed that the 20 most popular hedge fund stocks returned 24.4% in 2019 through September 30 and outperformed the S & P 500 ETF (SPY) by 4 percentage points. Hedge funds were also right to bet on D, as the stock posted a return of 6% in the third quarter and outperformed the market. Hedge funds have been rewarded for their relative dynamism. Video: Click on the image to view our video on the top 5 stocks of hedge funds.

5 most popular shares among hedge funds
5 most popular shares among hedge funds

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

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