The major US indexes are mixed ahead of Christmas, but shares of Sunedison Inc (NYSE:SUNE), Advanced Micro Devices, Inc. (NASDAQ:AMD), Patriot National Inc (NYSE:PN), Rovi Corporation (NASDAQ:ROVI) and MBIA Inc. (NYSE:MBI) are advancing today. In this article, let’s take a look at why these stocks are gaining ground and assess the hedge fund sentiment towards them.
We pay attention to hedge funds’ moves because our research has shown that hedge funds are extremely talented at picking stocks on the long side of their portfolios. It is true that hedge fund investors have been underperforming the market in recent years. However, this was mainly because hedge funds’ short stock picks lost a ton of money during the bull market that started in March 2009. Hedge fund investors also paid an arm and a leg for the services that they received. We have been tracking the performance of hedge funds’ 15 most popular small-cap stock picks in real time since the end of August 2012. These stocks have returned 102% since then and outperformed the S&P 500 Index by around 53 percentage points (see more details here). That’s why we believe it is important to pay attention to the hedge fund sentiment; we also don’t like paying huge fees.
The first on the list is Sunedison Inc (NYSE:SUNE), whose shares are up by 8.5% today after the company said it was conducting negotiations regarding a credit facility worth $650 million. The stock rebounded and recovered some of the losses registered after David Tepper’s Appaloosa Management has requested the right to inspect the books of TerraForm Power Inc (NASDAQ:TERP), a yieldco of Sunedison. Among the funds we track, Sunedison Inc (NYSE:SUNE) lost some popularity during the third quarter, with a total of 73 funds reporting long positions in the company, versus 93 funds a quarter earlier. However, these funds amassed 46.80% of the company’s outstanding stock heading into the fourth quarter. David Einhorn‘s Greenlight Capital reported owning 18.61 million shares of Sunedison in its latest 13F filing, having decreased its stake by 26% over the quarter.
Despite the fact that Advanced Micro Devices, Inc. (NASDAQ:AMD) has confirmed it is going to delay the launch of its Radeon graphics card with dual Fiji GPUs (code-named Gemini) for the next year, shares continue to rise, extending the upward trend that started yesterday. Among the funds we follow, 11 reported long positions in Advanced Micro Devices as of the end of September, down by four funds from a quarter earlier. Cliff Asness’s AQR Capital Management is the largest shareholder of the company among the investors we follow, owning 1.7 million shares valued at $2.92 million; the fund decreased its stake by 44% during the third quarter.