Is SolarCity Corp (NASDAQ:SCTY) a first-rate investment right now? The best stock pickers are getting more bullish. The number of bullish hedge fund bets went up by 7 in recent months.
If you’d ask most shareholders, hedge funds are seen as worthless, old financial vehicles of years past. While there are over 8000 funds with their doors open at present, we hone in on the elite of this club, about 450 funds. Most estimates calculate that this group has its hands on the majority of the hedge fund industry’s total capital, and by tracking their highest performing investments, we have formulated a few investment strategies that have historically outstripped Mr. Market. Our small-cap hedge fund strategy beat the S&P 500 index by 18 percentage points annually for a decade in our back tests, and since we’ve began to sharing our picks with our subscribers at the end of August 2012, we have beaten the S&P 500 index by 24 percentage points in 7 months (see all of our picks from August).
Just as beneficial, optimistic insider trading activity is another way to parse down the stock market universe. Just as you’d expect, there are plenty of motivations for a corporate insider to get rid of shares of his or her company, but just one, very simple reason why they would initiate a purchase. Many empirical studies have demonstrated the valuable potential of this strategy if investors understand what to do (learn more here).
Consequently, let’s take a glance at the key action surrounding SolarCity Corp (NASDAQ:SCTY).
How are hedge funds trading SolarCity Corp (NASDAQ:SCTY)?
According to our comprehensive database, Generation Investment Management, managed by David Blood and Al Gore, holds the largest position in SolarCity Corp (NASDAQ:SCTY). Generation Investment Management has a $50.5 million position in the stock, comprising 1.2% of its 13F portfolio. Sitting at the No. 2 spot is Alyeska Investment Group, managed by Anand Parekh, which held a $5.1 million position; 0.2% of its 13F portfolio is allocated to the company. Other hedge funds that are bullish include John A. Levin’s Levin Capital Strategies, Joseph A. Jolson’s Harvest Capital Strategies and Richard Driehaus’s Driehaus Capital.
With a general bullishness amongst the heavyweights, some big names have been driving this bullishness. Generation Investment Management, managed by David Blood and Al Gore, assembled the most valuable position in SolarCity Corp (NASDAQ:SCTY). Generation Investment Management had 50.5 million invested in the company at the end of the quarter. Anand Parekh’s Alyeska Investment Group also initiated a $5.1 million position during the quarter. The other funds with new positions in the stock are John A. Levin’s Levin Capital Strategies, Joseph A. Jolson’s Harvest Capital Strategies, and Richard Driehaus’s Driehaus Capital.
How are insiders trading SolarCity Corp (NASDAQ:SCTY)?
Insider purchases made by high-level executives is best served when the company we’re looking at has experienced transactions within the past 180 days. Over the latest six-month time frame, SolarCity Corp (NASDAQ:SCTY) has seen 4 unique insiders purchasing, and 2 insider sales (see the details of insider trades here).
Let’s go over hedge fund and insider activity in other stocks similar to SolarCity Corp (NASDAQ:SCTY). These stocks are Monolithic Power Systems, Inc. (NASDAQ:MPWR), Himax Technologies, Inc. (ADR) (NASDAQ:HIMX), SunPower Corporation (NASDAQ:SPWR), Silicon Laboratories (NASDAQ:SLAB), and Cirrus Logic, Inc. (NASDAQ:CRUS). This group of stocks belong to the semiconductor – specialized industry and their market caps match SCTY’s market cap.
|Company Name||# of Hedge Funds||# of Insiders Buying||# of Insiders Selling|
|Monolithic Power Systems, Inc. (NASDAQ:MPWR)||7||0||11|
|Himax Technologies, Inc. (ADR) (NASDAQ:HIMX)||6||0||0|
|SunPower Corporation (NASDAQ:SPWR)||9||0||3|
|Silicon Laboratories (NASDAQ:SLAB)||12||0||10|
|Cirrus Logic, Inc. (NASDAQ:CRUS)||19||0||7|
With the returns demonstrated by the aforementioned studies, retail investors must always monitor hedge fund and insider trading sentiment, and SolarCity Corp (NASDAQ:SCTY) applies perfectly to this mantra.
See the 7 most bullish money managers on the following pages: