Hedge funds run by legendary names like Nelson Peltz and David Tepper make billions of dollars a year for themselves and their super-rich accredited investors (you’ve got to have a minimum of $1 million liquid to invest in a hedge fund) by spending enormous resources on analyzing and uncovering data about small-cap stocks that the big brokerage houses don’t follow. Small caps are where they can generate significant out-performance. These stocks have been on a tear since the end of June, outperforming large-cap index funds by more than 10 percentage points. That’s why we pay special attention to hedge fund activity in these stocks.
Canadian Solar Inc. (NASDAQ:CSIQ) shareholders have witnessed a decrease in hedge fund interest recently. 15 hedge funds that we track were long the stock on September 30. There were 16 hedge funds in our database with CSIQ holdings at the end of the previous quarter. At the end of this article we will also compare CSIQ to other stocks including CorVel Corporation (NASDAQ:CRVL), Rush Enterprises, Inc. (NASDAQ:RUSHB), and Chatham Lodging Trust (NYSE:CLDT) to get a better sense of its popularity.
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.
How are hedge funds trading Canadian Solar Inc. (NASDAQ:CSIQ)?
At Q3’s end, a total of 15 of the hedge funds tracked by Insider Monkey held long positions in this stock, a 6% dip from the previous quarter. By comparison, 16 hedge funds held shares or bullish call options in CSIQ heading into this year, with ownership of the stock largely remaining flat all year. This suggests there are several long-term shareholders, but also that no one else is seeing any compelling reason to buy the stock. With the smart money’s sentiment swirling, there exists an “upper tier” of notable hedge fund managers who were boosting their stakes considerably (or already accumulated large positions).
Of the funds tracked by Insider Monkey, Lion Point, led by Didric Cederholm, holds the biggest position in Canadian Solar Inc. (NASDAQ:CSIQ). Lion Point has a $26 million position in the stock, comprising 3.4% of its 13F portfolio. The second most bullish fund manager is Ken Hahn of Quentec Asset Management, with a $22 million position; 3% of its 13F portfolio is allocated to the stock. Remaining members of the smart money that are bullish consist of Phil Frohlich’s Prescott Group Capital Management, Israel Englander’s Millennium Management, and Ken Griffin’s Citadel Investment Group. We should note that Lion Point is 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.