Should You Avoid Clean Energy Fuels Corp (CLNE)?

We have been waiting for this for a year and finally the third quarter ended up showing a nice bump in the performance of small-cap stocks. Both the S&P 500 and Russell 2000 were up since the end of the second quarter, but small-cap stocks outperformed the large-cap stocks by double digits. This is important for hedge funds, which are big supporters of small-cap stocks, because their investors started pulling some of their capital out due to poor recent performance. It is very likely that equity hedge funds will deliver better risk adjusted returns in the second half of this year. In this article we are going to look at how this recent market trend affected the sentiment of hedge funds towards Clean Energy Fuels Corp (NASDAQ:CLNE), and what that likely means for the prospects of the company and its stock.

Clean Energy Fuels Corp (NASDAQ:CLNE) investors should pay attention to a decrease in hedge fund sentiment recently. There were 12 hedge funds in our database with CLNE holdings at the end of the previous quarter. The level and the change in hedge fund popularity aren’t the only variables you need to analyze to decipher hedge funds’ perspectives. A stock may witness a boost in popularity but it may still be less popular than similarly priced stocks. That’s why at the end of this article we will examine companies such as Francesca’s Holdings Corp (NASDAQ:FRAN), CoLucid Pharmaceuticals Inc (NASDAQ:CLCD), and Sanchez Energy Corp (NYSE:SN) to gather more data points.

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.

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Hedge fund activity in Clean Energy Fuels Corp (NASDAQ:CLNE)

At the end of the third quarter, a total of 11 of the hedge funds tracked by Insider Monkey held long positions in this stock, a loss of 8% from the previous quarter. By comparison, 10 hedge funds held shares or bullish call options in CLNE heading into this year. With hedge funds’ capital changing hands, there exists an “upper tier” of noteworthy hedge fund managers who were increasing their holdings considerably (or already accumulated large positions).

When looking at the institutional investors followed by Insider Monkey, Renaissance Technologies, one of the largest hedge funds in the world, holds the largest position in Clean Energy Fuels Corp (NASDAQ:CLNE). Renaissance Technologies has a $14.5 million position in the stock. Coming in second is Israel Englander’s  Millennium Management holding a $9 million position. Other peers that hold long positions include D. E. Shaw’s D E Shaw, Peter Muller’s PDT Partners and David Costen Haley’s HBK Investments. We should note that none of these hedge funds are 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.