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FuelCell Energy, Inc. (FCEL): Hedge Funds Going Back and Forth

The latest 13F reporting period has come and gone, and Insider Monkey is again at the forefront when it comes to making use of this gold mine of data. We at Insider Monkey have plowed through 821 13F filings that hedge funds and well-known value investors are required to file by the SEC. The 13F filings show the funds’ and investors’ portfolio positions as of March 31st, a week after the market trough. In this article we look at what those investors think of FuelCell Energy, Inc. (NASDAQ:FCEL).

FuelCell Energy, Inc. (NASDAQ:FCEL) was in 6 hedge funds’ portfolios at the end of March. FCEL investors should pay attention to an increase in hedge fund sentiment in recent months. There were 2 hedge funds in our database with FCEL holdings at the end of the previous quarter. Our calculations also showed that FCEL 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.

Hedge funds’ reputation as shrewd investors has been tarnished in the last decade as their hedged returns couldn’t keep up with the unhedged returns of the market indices. Our research was able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by more than 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.

Donald Sussman Paloma Partners

Donald Sussman of Paloma Partners

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 stocks recommended/scorned by legendary Bill Miller. 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. With all of this in mind we’re going to take a look at the new hedge fund action encompassing FuelCell Energy, Inc. (NASDAQ:FCEL).

How have hedgies been trading FuelCell Energy, Inc. (NASDAQ:FCEL)?

At the end of the first quarter, a total of 6 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 200% from the fourth quarter of 2019. On the other hand, there were a total of 5 hedge funds with a bullish position in FCEL a year ago. With hedge funds’ sentiment swirling, there exists a select group of noteworthy hedge fund managers who were increasing their holdings substantially (or already accumulated large positions).

Is FCEL A Good Stock To Buy?

Among these funds, Gotham Asset Management held the most valuable stake in FuelCell Energy, Inc. (NASDAQ:FCEL), which was worth $1.4 million at the end of the third quarter. On the second spot was Millennium Management which amassed $0.8 million worth of shares. Citadel Investment Group, ExodusPoint Capital, and Citadel Investment Group 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 Gotham Asset Management allocated the biggest weight to FuelCell Energy, Inc. (NASDAQ:FCEL), around 0.04% of its 13F portfolio. ExodusPoint Capital is also relatively very bullish on the stock, dishing out 0.02 percent of its 13F equity portfolio to FCEL.

As one would reasonably expect, some big names were leading the bulls’ herd. Gotham Asset Management, managed by Joel Greenblatt, created the biggest position in FuelCell Energy, Inc. (NASDAQ:FCEL). Gotham Asset Management had $1.4 million invested in the company at the end of the quarter. Israel Englander’s Millennium Management also made a $0.8 million investment in the stock during the quarter. The following funds were also among the new FCEL investors: Michael Gelband’s ExodusPoint Capital, Ken Griffin’s Citadel Investment Group, and Daniel S. Och’s OZ Management.

Let’s also examine hedge fund activity in other stocks – not necessarily in the same industry as FuelCell Energy, Inc. (NASDAQ:FCEL) but similarly valued. We will take a look at Quotient Limited (NASDAQ:QTNT), Kimbell Royalty Partners (NYSE:KRP), Wanda Sports Group Company Limited (NASDAQ:WSG), and Noble Midstream Partners LP (NYSE:NBLX). This group of stocks’ market valuations resemble FCEL’s market valuation.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
QTNT 20 144956 -2
KRP 9 10619 3
WSG 6 5944 3
NBLX 2 1267 -3
Average 9.25 40697 0.25

View table here if you experience formatting issues.

As you can see these stocks had an average of 9.25 hedge funds with bullish positions and the average amount invested in these stocks was $41 million. That figure was $3 million in FCEL’s case. Quotient Limited (NASDAQ:QTNT) is the most popular stock in this table. On the other hand Noble Midstream Partners LP (NYSE:NBLX) is the least popular one with only 2 bullish hedge fund positions. FuelCell Energy, Inc. (NASDAQ:FCEL) 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 13.9% in 2020 through June 10th and still beat the market by 14.2 percentage points. A small number of hedge funds were also right about betting on FCEL as the stock returned 123.2% during the second quarter and outperformed the market by an even larger margin.

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