A Smart SunPower Corporation (SPWR) Shareholder Would Do This

SunPower Corporation (NASDAQ:SPWR) was in 10 hedge funds’ portfolio at the end of the first quarter of 2013. SPWR investors should pay attention to a decrease in activity from the world’s largest hedge funds lately. There were 10 hedge funds in our database with SPWR positions at the end of the previous quarter.

To most traders, hedge funds are viewed as worthless, outdated financial vehicles of the past. While there are more than 8000 funds trading today, we look at the masters of this club, about 450 funds. Most estimates calculate that this group controls most of the hedge fund industry’s total capital, and by monitoring their best investments, we have formulated a number of investment strategies that have historically outpaced the broader indices. Our small-cap hedge fund strategy outpaced the S&P 500 index by 18 percentage points per annum 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 outpaced the S&P 500 index by 23.3 percentage points in 8 months (see all of our picks from August).

Just as beneficial, optimistic insider trading activity is another way to parse down the financial markets. Obviously, there are a number of reasons for a corporate insider to get rid of shares of his or her company, but just one, very clear reason why they would buy. Many empirical studies have demonstrated the impressive potential of this tactic if shareholders understand where to look (learn more here).

With these “truths” under our belt, let’s take a glance at the recent action encompassing SunPower Corporation (NASDAQ:SPWR).

What have hedge funds been doing with SunPower Corporation (NASDAQ:SPWR)?

At Q1’s end, a total of 10 of the hedge funds we track were long in this stock, a change of 0% from the previous quarter. With hedge funds’ capital changing hands, there exists an “upper tier” of key hedge fund managers who were boosting their holdings significantly.

SunPower Corporation (NASDAQ:SPWR)According to our comprehensive database, Royce & Associates, managed by Chuck Royce, holds the biggest position in SunPower Corporation (NASDAQ:SPWR). Royce & Associates has a $16.5 million position in the stock, comprising 0.1% of its 13F portfolio. The second largest stake is held by Andrew Sandler of Sandler Capital Management, with a $15.5 million call position; 0.5% of its 13F portfolio is allocated to the company. Some other peers with similar optimism include John A. Levin’s Levin Capital Strategies, Wojciech Uzdelewicz’s Espalier Global Management and Wojciech Uzdelewicz’s Espalier Global Management.

Since SunPower Corporation (NASDAQ:SPWR) has faced declining sentiment from the aggregate hedge fund industry, it’s safe to say that there was a specific group of funds who sold off their positions entirely heading into Q2. Intriguingly, Philip Hempleman’s Ardsley Partners said goodbye to the largest investment of the 450+ funds we track, totaling about $7.3 million in stock.. Ken Griffin’s fund, Citadel Investment Group, also sold off its stock, about $3.9 million worth. These transactions are important to note, as aggregate hedge fund interest stayed the same (this is a bearish signal in our experience).

What have insiders been doing with SunPower Corporation (NASDAQ:SPWR)?

Insider buying is best served when the primary stock in question has seen transactions within the past half-year. Over the last 180-day time period, SunPower Corporation (NASDAQ:SPWR) has seen zero unique insiders buying, and 4 insider sales (see the details of insider trades here).

With the returns shown by our research, retail investors must always keep an eye on hedge fund and insider trading sentiment, and SunPower Corporation (NASDAQ:SPWR) applies perfectly to this mantra.

Click here to learn why you should track hedge funds