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Did Hedge Funds Drop The Ball On Vivint Solar Inc (VSLR) ?

A market surge in the first quarter, spurred by easing global macroeconomic concerns and Powell’s pivot ended up having a positive impact on the markets and many hedge funds as a result. The stocks of smaller companies which were especially hard hit during the fourth quarter slightly outperformed the market during the first quarter. Unfortunately, Trump is unpredictable and volatility returned in the second quarter and smaller-cap stocks went back to selling off. We finished compiling the latest 13F filings to get an idea about what hedge funds are thinking about the overall market as well as individual stocks. In this article we will study the hedge fund sentiment to see how those concerns affected their ownership of Vivint Solar Inc (NYSE:VSLR) during the quarter.

Vivint Solar Inc (NYSE:VSLR) investors should pay attention to a decrease in support from the world’s most elite money managers in recent months. Our calculations also showed that VSLR isn’t among the 30 most popular stocks among hedge funds.

If you’d ask most traders, hedge funds are assumed to be worthless, old financial tools of the past. While there are over 8000 funds trading at present, Our experts choose to focus on the crème de la crème of this group, about 750 funds. Most estimates calculate that this group of people administer the majority of all hedge funds’ total capital, and by paying attention to their finest picks, Insider Monkey has come up with many investment strategies that have historically beaten the S&P 500 index. Insider Monkey’s flagship hedge fund strategy exceeded the S&P 500 index by around 5 percentage points per year since its inception in May 2014 through June 18th. We were able to generate large returns even by identifying short candidates. Our portfolio of short stocks lost 28.2% since February 2017 (through June 18th) even though the market was up nearly 30% during the same period. We just shared a list of 5 short targets in our latest quarterly update and they are already down an average of 8.2% in a month whereas our long picks outperformed the market by 2.5 percentage points in this volatile 5 week period (our long picks also beat the market by 15 percentage points so far this year).

Steve Cohen SAC CAPITAL ADVISORS

Let’s take a peek at the fresh hedge fund action encompassing Vivint Solar Inc (NYSE:VSLR).

Hedge fund activity in Vivint Solar Inc (NYSE:VSLR)

Heading into the second quarter of 2019, a total of 11 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -31% from one quarter earlier. By comparison, 6 hedge funds held shares or bullish call options in VSLR a year ago. So, let’s examine which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

No of Hedge Funds with VSLR Positions

More specifically, Arosa Capital Management was the largest shareholder of Vivint Solar Inc (NYSE:VSLR), with a stake worth $9.8 million reported as of the end of March. Trailing Arosa Capital Management was Point72 Asset Management, which amassed a stake valued at $9.1 million. D E Shaw, Arrowstreet Capital, and Millennium Management were also very fond of the stock, giving the stock large weights in their portfolios.

Because Vivint Solar Inc (NYSE:VSLR) has witnessed bearish sentiment from the aggregate hedge fund industry, it’s easy to see that there lies a certain “tier” of funds that elected to cut their positions entirely in the third quarter. Intriguingly, Jonathan Barrett and Paul Segal’s Luminus Management sold off the largest position of the 700 funds tracked by Insider Monkey, comprising an estimated $5.7 million in stock, and Daniel Arbess’s Perella Weinberg Partners was right behind this move, as the fund dropped about $1.3 million worth. These transactions are important to note, as aggregate hedge fund interest was cut by 5 funds in the third quarter.

Let’s now take a look at hedge fund activity in other stocks – not necessarily in the same industry as Vivint Solar Inc (NYSE:VSLR) but similarly valued. We will take a look at Unisys Corporation (NYSE:UIS), CEVA, Inc. (NASDAQ:CEVA), Retail Value Inc. (NYSE:RVI), and Aurinia Pharmaceuticals Inc (NASDAQ:AUPH). This group of stocks’ market caps are closest to VSLR’s market cap.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
UIS 19 77897 2
CEVA 10 30237 0
RVI 17 168765 4
AUPH 13 88651 5
Average 14.75 91388 2.75

View table here if you experience formatting issues.

As you can see these stocks had an average of 14.75 hedge funds with bullish positions and the average amount invested in these stocks was $91 million. That figure was $23 million in VSLR’s case. Unisys Corporation (NYSE:UIS) is the most popular stock in this table. On the other hand CEVA, Inc. (NASDAQ:CEVA) is the least popular one with only 10 bullish hedge fund positions. Vivint Solar Inc (NYSE:VSLR) is not the least popular stock in this group but hedge fund interest is still below average. Our calculations showed that top 20 most popular stocks among hedge funds returned 6.2% in Q2 through June 19th and outperformed the S&P 500 ETF (SPY) by nearly 3 percentage points. A small number of hedge funds were also right about betting on VSLR as the stock returned 50.7% during the same time frame and outperformed the market by an even larger margin.

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

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