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First Solar, Inc. (FSLR): Hedge Funds Taking Some Chips Off The Table

Before we spend countless hours researching a company, we like to analyze what insiders, hedge funds and billionaire investors think of the stock first. This is a necessary first step in our investment process because our research has shown that the elite investors’ consensus returns have been exceptional. In the following paragraphs, we find out what the billionaire investors and hedge funds think of First Solar, Inc. (NASDAQ:FSLR).

Is First Solar, Inc. (NASDAQ:FSLR) undervalued? The best stock pickers are in a bearish mood. The number of bullish hedge fund bets decreased by 2 lately. Our calculations also showed that FSLR 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.

Steven Cohen

At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, 2020’s unprecedented market conditions provide us with the highest number of trading opportunities in a decade. So we are checking out trades like this one. We interview hedge fund managers and ask them about their best ideas. If you want to find out the best healthcare stock to buy right now, you can watch our latest hedge fund manager interview here. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. Our best call in 2020 was shorting the market when the S&P 500 was trading at 3150 after realizing the coronavirus pandemic’s significance before most investors. Keeping this in mind let’s go over the fresh hedge fund action surrounding First Solar, Inc. (NASDAQ:FSLR).

How are hedge funds trading First Solar, Inc. (NASDAQ:FSLR)?

At Q1’s end, a total of 22 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -8% from the fourth quarter of 2019. The graph below displays the number of hedge funds with bullish position in FSLR over the last 18 quarters. With the smart money’s positions undergoing their usual ebb and flow, there exists a select group of noteworthy hedge fund managers who were boosting their stakes significantly (or already accumulated large positions).

Is FSLR A Good Stock To Buy?

The largest stake in First Solar, Inc. (NASDAQ:FSLR) was held by Lansdowne Partners, which reported holding $75.4 million worth of stock at the end of September. It was followed by Citadel Investment Group with a $29.6 million position. Other investors bullish on the company included Masters Capital Management, Encompass Capital Advisors, and Citadel Investment Group. In terms of the portfolio weights assigned to each position Lansdowne Partners allocated the biggest weight to First Solar, Inc. (NASDAQ:FSLR), around 4.18% of its 13F portfolio. Trellus Management Company is also relatively very bullish on the stock, dishing out 2.13 percent of its 13F equity portfolio to FSLR.

Due to the fact that First Solar, Inc. (NASDAQ:FSLR) has experienced a decline in interest from hedge fund managers, it’s safe to say that there exists a select few hedge funds that elected to cut their positions entirely heading into Q4. It’s worth mentioning that Steve Cohen’s Point72 Asset Management cut the biggest position of the “upper crust” of funds monitored by Insider Monkey, worth about $4.7 million in stock, and Till Bechtolsheimer’s Arosa Capital Management was right behind this move, as the fund said goodbye to about $3.9 million worth. These transactions are important to note, as total hedge fund interest was cut by 2 funds heading into Q4.

Let’s now take a look at hedge fund activity in other stocks – not necessarily in the same industry as First Solar, Inc. (NASDAQ:FSLR) but similarly valued. These stocks are Landstar System, Inc. (NASDAQ:LSTR), Spire Inc. (NYSE:SR), National Oilwell Varco, Inc. (NYSE:NOV), and AppFolio Inc (NASDAQ:APPF). All of these stocks’ market caps resemble FSLR’s market cap.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
LSTR 22 156653 -2
SR 13 40465 1
NOV 29 476345 -2
APPF 19 272296 3
Average 20.75 236440 0

View table here if you experience formatting issues.

As you can see these stocks had an average of 20.75 hedge funds with bullish positions and the average amount invested in these stocks was $236 million. That figure was $151 million in FSLR’s case. National Oilwell Varco, Inc. (NYSE:NOV) is the most popular stock in this table. On the other hand Spire Inc. (NYSE:SR) is the least popular one with only 13 bullish hedge fund positions. First Solar, Inc. (NASDAQ:FSLR) is not the most popular stock in this group but hedge fund interest is still above 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 13.9% in 2020 through June 10th but still beat the market by 14.2 percentage points. Hedge funds were also right about betting on FSLR as the stock returned 42% in Q2 (through June 10th) and outperformed the market. Hedge funds were rewarded for their relative bullishness.

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