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 SunPower Corporation (NASDAQ:SPWR) based on those filings.
SunPower Corporation (NASDAQ:SPWR) investors should pay attention to a decrease in hedge fund interest in recent months. SPWR was in 14 hedge funds’ portfolios at the end of March. There were 15 hedge funds in our database with SPWR positions at the end of the previous quarter. Our calculations also showed that SPWR 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.
At Insider Monkey we scour multiple sources to uncover the next great investment idea. For example, blockchain technology’s influence will go beyond online payments. So, we are checking out this futurist’s moonshot opportunities in tech stocks. 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 take a peek at the fresh hedge fund action regarding SunPower Corporation (NASDAQ:SPWR).
How have hedgies been trading SunPower Corporation (NASDAQ:SPWR)?
Heading into the second quarter of 2020, a total of 14 of the hedge funds tracked by Insider Monkey were long this stock, a change of -7% from the previous quarter. On the other hand, there were a total of 9 hedge funds with a bullish position in SPWR a year ago. With hedge funds’ positions undergoing their usual ebb and flow, there exists a few notable hedge fund managers who were increasing their holdings considerably (or already accumulated large positions).
The largest stake in SunPower Corporation (NASDAQ:SPWR) was held by Luminus Management, which reported holding $8.2 million worth of stock at the end of September. It was followed by Two Sigma Advisors with a $4.5 million position. Other investors bullish on the company included PDT Partners, AQR Capital Management, and D E Shaw. In terms of the portfolio weights assigned to each position Luminus Management allocated the biggest weight to SunPower Corporation (NASDAQ:SPWR), around 0.85% of its 13F portfolio. PDT Partners is also relatively very bullish on the stock, designating 0.34 percent of its 13F equity portfolio to SPWR.
Because SunPower Corporation (NASDAQ:SPWR) has faced a decline in interest from the entirety of the hedge funds we track, it’s safe to say that there is a sect of funds that slashed their positions entirely heading into Q4. At the top of the heap, Matthew L Pinz’s Pinz Capital cut the largest stake of the “upper crust” of funds monitored by Insider Monkey, worth about $2.9 million in stock, and Peter Rathjens, Bruce Clarke and John Campbell’s Arrowstreet Capital was right behind this move, as the fund dropped about $1.9 million worth. These bearish behaviors are intriguing to say the least, as total hedge fund interest dropped by 1 funds heading into Q4.
Let’s now review hedge fund activity in other stocks – not necessarily in the same industry as SunPower Corporation (NASDAQ:SPWR) but similarly valued. These stocks are Colony Capital Inc (NYSE:CLNY), Kadant Inc. (NYSE:KAI), Omega Flex, Inc. (NASDAQ:OFLX), and Adient plc (NYSE:ADNT). This group of stocks’ market valuations are closest to SPWR’s market valuation.
|Ticker||No of HFs with positions||Total Value of HF Positions (x1000)||Change in HF Position|
View table here if you experience formatting issues.
As you can see these stocks had an average of 15 hedge funds with bullish positions and the average amount invested in these stocks was $98 million. That figure was $26 million in SPWR’s case. Adient plc (NYSE:ADNT) is the most popular stock in this table. On the other hand Omega Flex, Inc. (NASDAQ:OFLX) is the least popular one with only 3 bullish hedge fund positions. SunPower Corporation (NASDAQ:SPWR) 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 13.3% in 2020 through June 25th and still beat the market by 16.8 percentage points. A small number of hedge funds were also right about betting on SPWR as the stock returned 51.9% during the second quarter and outperformed the market by an even larger margin.
Disclosure: None. This article was originally published at Insider Monkey.