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Clean Energy Fuels Corp (CLNE): Hedge Funds Are De-risking

The financial regulations require hedge funds and wealthy investors that exceeded the $100 million equity holdings threshold to file a report that shows their positions at the end of every quarter. Even though it isn’t the intention, these filings to a certain extent level the playing field for ordinary investors. The latest round of 13F filings disclosed the funds’ positions on March 31st, about a week after the S&P 500 Index bottomed. We at Insider Monkey have made an extensive database of more than 821 of those established hedge funds and famous value investors’ filings. In this article, we analyze how these elite funds and prominent investors traded Clean Energy Fuels Corp (NASDAQ:CLNE) based on those filings.

Clean Energy Fuels Corp (NASDAQ:CLNE) investors should be aware of a decrease in hedge fund sentiment lately. Our calculations also showed that CLNE isn’t among the 30 most popular stocks among hedge funds (click for Q1 rankings and see the video for a quick look at the top 5 stocks).

Video: Watch our video about the top 5 most popular hedge fund stocks.

Why do we pay any attention at all to hedge fund sentiment? Our research has shown that a select group of hedge fund holdings outperformed the S&P 500 ETFs by 58 percentage points since March 2017 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that’ll significantly underperform the market. We have been tracking and sharing the list of these stocks since February 2017 and they lost 36% through May 18th. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.

Roger Ibbotson of Zebra Capital Management

At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, We take a look at lists like the 10 most profitable companies in the world to identify the compounders that are likely to deliver double digit returns. We interview hedge fund managers and ask them about their best ideas. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. For example we are checking out stocks recommended/scorned by legendary Bill Miller. Our best call in 2020 was shorting the market when the S&P 500 was trading at 3150 in February after realizing the coronavirus pandemic’s significance before most investors. Now we’re going to check out the latest hedge fund action surrounding Clean Energy Fuels Corp (NASDAQ:CLNE).

What does smart money think about Clean Energy Fuels Corp (NASDAQ:CLNE)?

At the end of the first quarter, a total of 8 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -20% from one quarter earlier. The graph below displays the number of hedge funds with bullish position in CLNE over the last 18 quarters. So, let’s see which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

Among these funds, Renaissance Technologies held the most valuable stake in Clean Energy Fuels Corp (NASDAQ:CLNE), which was worth $16.1 million at the end of the third quarter. On the second spot was Millennium Management which amassed $0.9 million worth of shares. Citadel Investment Group, Two Sigma Advisors, and Diametric Capital were also very fond of the stock, becoming one of the largest hedge fund holders of the company. In terms of the portfolio weights assigned to each position Diametric Capital allocated the biggest weight to Clean Energy Fuels Corp (NASDAQ:CLNE), around 0.27% of its 13F portfolio. Zebra Capital Management is also relatively very bullish on the stock, setting aside 0.03 percent of its 13F equity portfolio to CLNE.

Due to the fact that Clean Energy Fuels Corp (NASDAQ:CLNE) has faced a decline in interest from the smart money, it’s easy to see that there was a specific group of funds that elected to cut their full holdings last quarter. Intriguingly, Brian C. Freckmann’s Lyon Street Capital said goodbye to the largest investment of the 750 funds monitored by Insider Monkey, totaling about $0.5 million in stock, and Philip Hempleman’s Ardsley Partners was right behind this move, as the fund dropped about $0.5 million worth. These bearish behaviors are interesting, as total hedge fund interest was cut by 2 funds last quarter.

Let’s also examine hedge fund activity in other stocks – not necessarily in the same industry as Clean Energy Fuels Corp (NASDAQ:CLNE) but similarly valued. We will take a look at Caesarstone Ltd (NASDAQ:CSTE), Zynex, Inc. (NASDAQ:ZYXI), Crawford & Company (NYSE:CRD), and WisdomTree Investments, Inc. (NASDAQ:WETF). This group of stocks’ market values are closest to CLNE’s market value.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
CSTE 10 14694 1
ZYXI 7 8332 0
CRD 10 49389 0
WETF 20 38214 3
Average 11.75 27657 1

View table here if you experience formatting issues.

As you can see these stocks had an average of 11.75 hedge funds with bullish positions and the average amount invested in these stocks was $28 million. That figure was $18 million in CLNE’s case. WisdomTree Investments, Inc. (NASDAQ:WETF) is the most popular stock in this table. On the other hand Zynex, Inc. (NASDAQ:ZYXI) is the least popular one with only 7 bullish hedge fund positions. Clean Energy Fuels Corp (NASDAQ:CLNE) is not the least popular stock in this group but hedge fund interest is still below average. Our calculations showed that top 10 most popular stocks among hedge funds returned 41.4% in 2019 and outperformed the S&P 500 ETF (SPY) by 10.1 percentage points. These stocks gained 12.2% in 2020 through June 17th but beat the market by 14.8 percentage points. A small number of hedge funds were also right about betting on CLNE, though not to the same extent, as the stock returned 24.2% during the second quarter and outperformed the market.

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Disclosure: None. This article was originally published at Insider Monkey.