After outperforming the S&P 500 in the run-up into the election, the NASDAQ has lagged the S&P 500 afterwards. In this article, we recap the catalysts that caused Amazon.com, Inc. (NASDAQ:AMZN), Tesla Motors Inc (NASDAQ:TSLA), SolarCity Corp (NASDAQ:SCTY), SunPower Corporation (NASDAQ:SPWR), and First Solar, Inc. (NASDAQ:FSLR) to each move this week, and we use 13F data to examine how elite funds were positioned among the stocks.
Through extensive research, we determined that imitating some of the picks of hedge funds and other institutional investors can help generate market-beating returns over the long run. The key is to focus on the small-cap picks of these investors, since they are usually less followed by the broader market and are less price-efficient. Our backtests that covered the period between 1999 and 2012, showed that following the 15 most popular small-caps among hedge funds can help a retail investor beat the market by an average of 95 basis points per month (see the details here).
After rallying more than 4% into the November 8th vote, Amazon.com, Inc. (NASDAQ:AMZN) subsequently retraced to end the week down 2.12%. Traders sold shares of the e-commerce giant due to some friction between CEO Jeff Bezos, who also owns the Washington Post, and President-elect Donald Trump. Trump has previously said that Amazon ‘is getting away with murder, tax-wise’. He also once said the following about Amazon: ‘believe me, if I become president, oh, do they have problems’. Given the power of the Presidency, some traders sold out of Amazon in fear of what Trump might do in the future.
Bezos, meanwhile, has tried to bury the hatchet by tweeting the following to Trump’s Twitter handle:
Congratulations to @realDonaldTrump. I for one give him my most open mind and wish him great success in his service to the country.
Bulls hope that Amazon can get on Trump’s good side and that the company can maintain its current momentum for the next four years. Of the 749 elite funds we track, 145 funds owned $19.82 billion of Amazon.com, Inc. (NASDAQ:AMZN) and accounted for 5.90% of the float on June 30, versus 133 funds and $14.7 billion respectively on March 31.
Due to the election of Donald Trump as the next President, Tesla Motors Inc (NASDAQ:TSLA) and SolarCity Corp (NASDAQ:SCTY) sold off Wednesday morning before recovering much of their losses. Tesla ended up down just 1.05% for the week while SolarCity inched up 0.15%. Given that Trump is more in favor of the existing automakers (who are heavily concentrated in Michigan, Ohio, and other swing states that clinched the Republican victory) as well as the oil and gas industry, the favorable regulatory environment that has aided Tesla and SolarCity’s growth might not be as positive. In addition, given that Trump isn’t as concerned about global warming as Clinton is, future Corporate Average Fuel Economy standards might not be as stringent and existing automakers cars may subsequently be more competitive. More competitive internal combustion engine cars would slow down EV adoption and Tesla’s growth rate. With that said, Tesla shares haven’t fallen very much due to the stock’s perceived long term potential. Given that SolarCity shares will technically be worth 0.11 Tesla shares each if the merger is approved, SolarCity hasn’t fallen either. According to our records, 36 and 26 elite funds were long Tesla Motors Inc (NASDAQ:TSLA) and SolarCity Corp (NASDAQ:SCTY) at the end of Q2.
On the next page, we recap the meaningful events that occurred to SunPower Corporation, and First Solar Inc.