Why Is Peconic Partners Bullish on NextEra Energy, Inc. (NEE) Right Now?

We recently compiled a list of the 191.50% in 3 Years: Peconic Hedge Fund's Top 10 Stock Picks. In this article, we are going to take a look at where NextEra Energy, Inc. (NYSE:NEE) stands against the other stocks.

Established in 1997, Peconic Partners is a hedge fund manager based in New York, under the leadership of William Harnisch. The firm manages both its capital and that of its clients, using long/short equity hedge fund strategies. It also follows a thematic investment approach with a structured and consistent methodology, aiming to achieve positive returns over the long term regardless of market conditions.

Peconic Partners's stock selection approach is driven by its deep experience. The Peconic Partners investment strategy has a history spanning over 40 years, originating with its predecessor firm. Peconic Partners' long-term track record, history of capital appreciation, and past ability to generate alpha are testaments to the vision, insight, and patience derived from their experience.

William Harnisch is the Chief Investment Strategist at Peconic Partners. He managed Peconic Partners from the late 1970s until 1997 when the long-only business was sold to a privately-held financial services firm aiming to expand its asset management business. However, William Harnisch and his partners retained exclusive ownership of the hedge business. In December 2004, he and the current Peconic team formed Peconic Partners, continuing the successful and disciplined hedge fund strategy practiced since the late 1970s.

Mr. Harnisch's career began in 1968 at Chase Manhattan Bank. He later joined Forstmann-Leff Associates (FLA), managing assets exceeding $5 billion and entering the hedge fund business in 1986. In 1997, he sold FLA's long-only business and in 2004, he founded Peconic Partners to concentrate on hedged products. William Harnisch holds a B.B.A. from Baruch College and is a Chartered Financial Analyst. He is active in philanthropy through the William F. Harnisch Foundation and is a board member of the Baruch College Fund. His market insights have been featured in the Wall Street Journal and Barron’s.

In 2023, Peconic Partners LLC regained the top spot on HedgeFollow's Top 20 Best Performing Hedge Funds list. Despite challenges like rising inflation and market volatility, Peconic Partners delivered a remarkable 191.50% performance over three years. This achievement is significant as many money managers struggled during a surprising market rally. While only 38% of large-cap mutual funds beat the market in 2023, and long-short hedge funds saw minimal gains, Peconic Partners excelled. For the fourth year in a row, the New York-based fund achieved an annual gain of 38%, three times higher than the S&P 500’s performance.

In late December of 2023, Mr. Harnisch increased bets against the SPDR S&P 500 ETF Trust and took short positions in expensive industrial stocks and consumer-product makers that have raised prices aggressively. This caused the fund's net leverage to decrease from 50% to 33% in a few weeks, and it has continued to drop in early 2024.

Our Methodology

The companies mentioned in this article come from Peconic Hedge Fund's top 10 stock picks at the end of the first quarter of 2024. To give readers a thorough understanding of these companies, we've included analyst ratings and other relevant details. We also mention the number of hedge fund investors in each company. Why focus on the stocks that hedge funds invest in? Our research shows that mimicking the top picks of the best hedge funds can lead to market-beating returns. Our quarterly newsletter's strategy, which selects 14 small-cap and large-cap stocks each quarter, has returned 275% since May 2014, outperforming its benchmark by 150 percentage points. (see more details here)

A wind turbine, its blades spinning to generate clean renewable energy.

NextEra Energy, Inc. (NYSE:NEE)

Number of Hedge Fund Holders: 72

NextEra Energy (NYSE:NEE) experienced a turbulent year, with shares dropping to a 52-week low of $47.15 in October 2023 before rebounding to over $75 by July 12, 2024. NextEra Energy (NYSE:NEE) surged after the pandemic, reaching all-time highs by the end of 2021. At one point, NextEra Energy (NYSE:NEE)'s market cap exceeded that of

Exxon Mobil Corporation

(NYSE:XOM). NextEra Energy (NYSE:NEE) operates 74 gigawatts of energy, with projections to surpass 100 gigawatts in the next three years. Senior leadership at NextEra Energy (NYSE:NEE) maintains that forward EPS projections remain unchanged, with expected annualized EPS growth of 6-8% through 2026.

Analyst Steven Fiorillo believes NextEra Energy, Inc. (NYSE:NEE) will benefit significantly from the growing AI boom. He expects strong capital appreciation and dividend growth as energy demand rises. Regulatory filings reveal that at the end of the first quarter of 2024, Peconic Partners owned 250,000 shares of NextEra Energy, Inc. (NYSE:NEE), valued at $15,977,500. This represented 0.7% of their portfolio. NextEra Energy, Inc. (NYSE:NEE) ranks 6th in Peconic Hedge Fund's top 10 stock picks.

ClearBridge Large Cap Growth Strategy stated the following regarding NextEra Energy, Inc. (NYSE:NEE) in its Q2 2024 investor letter:

“AI-related momentum was a key driver of performance in the second quarter, lifting the enablers in technology as well as holdings like renewable power producer NextEra Energy, Inc. (NYSE:NEE) that supply the increasing energy needs of data centers. Parts of the market lacking an AI connection, like our medical device holdings, underperformed despite no change to fundamentals. We have managed through several similar momentum periods over our tenure and have delivered long-term results for shareholders by staying true to an approach that emphasizes diversification across three buckets of growth companies (select, stable and cyclical) and seeks to take advantage of attractive entry points into quality growth businesses.”

Overall NEE ranks 6th on our list of Peconic Partners' top 10 stock picks. You can visit 191.50% in 3 Years: Peconic Hedge Fund's Top 10 Stock Picks to see the other stocks that are on hedge funds’ radar. While we recognize NEE's potential as an investment, our conviction lies in the belief that AI stocks hold greater promise for delivering higher returns and doing so within a shorter timeframe. If you are looking for an AI stock that is more promising than NEE but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.

 

READ NEXT: Analyst Sees a New $25 Billion “Opportunity” for NVIDIA and Jim Cramer is Recommending These 10 Stocks in June.

 

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