Hedge Funds Are Souring On First Solar, Inc. (FSLR)

Hedge Funds and other institutional investors have just completed filing their 13Fs with the Securities and Exchange Commission, revealing their equity portfolios as of the end of September. At Insider Monkey, we follow nearly 900 active hedge funds and notable investors and by analyzing their 13F filings, we can determine the stocks that they are collectively bullish on. One of their picks is First Solar, Inc. (NASDAQ:FSLR), so let’s take a closer look at the sentiment that surrounds it in the current quarter.

Is First Solar, Inc. (NASDAQ:FSLR) undervalued? Money managers were in a pessimistic mood. The number of long hedge fund bets dropped by 10 recently. First Solar, Inc. (NASDAQ:FSLR) was in 24 hedge funds’ portfolios at the end of the first quarter of 2021. The all time high for this statistic is 40. Our calculations also showed that FSLR isn’t among the 30 most popular stocks among hedge funds (click for Q1 rankings).

In the financial world there are a large number of tools investors have at their disposal to grade stocks. A pair of the most under-the-radar tools are hedge fund and insider trading indicators. We have shown that, historically, those who follow the top picks of the best fund managers can outperform the broader indices by a solid amount. Insider Monkey’s monthly stock picks returned 206.8% since March 2017 and outperformed the S&P 500 ETFs by more than 115 percentage points (see the details here). That’s why we believe hedge fund sentiment is a useful indicator that investors should pay attention to.

Dmitry Balyasny of Balyasny Asset Managemnet

Dmitry Balyasny of Balyasny Asset Management

At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, Chuck Schumer recently stated that marijuana legalization will be a Senate priority. So, we are checking out this under the radar stock that will benefit from this. We go through lists like the 10 best battery stocks to pick the next Tesla that will deliver a 10x return. Even though we recommend positions in only a tiny fraction of the companies we analyze, we check out as many stocks as we can. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. You can subscribe to our free daily newsletter on our homepage. With all of this in mind we’re going to take a peek at the latest hedge fund action surrounding First Solar, Inc. (NASDAQ:FSLR).

Do Hedge Funds Think FSLR Is A Good Stock To Buy Now?

At the end of the first quarter, a total of 24 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -29% from the fourth quarter of 2020. Below, you can check out the change in hedge fund sentiment towards FSLR over the last 23 quarters. With the smart money’s sentiment swirling, there exists a few notable hedge fund managers who were increasing their holdings meaningfully (or already accumulated large positions).

According to publicly available hedge fund and institutional investor holdings data compiled by Insider Monkey, Citadel Investment Group, managed by Ken Griffin, holds the number one position in First Solar, Inc. (NASDAQ:FSLR). Citadel Investment Group has a $118.3 million call position in the stock, comprising less than 0.1%% of its 13F portfolio. Coming in second is Douglas Harold Hart Polunin of Polunin Capital, with a $76 million position; the fund has 39.3% of its 13F portfolio invested in the stock. Other hedge funds and institutional investors with similar optimism include Jacob Mitchell’s Antipodes Partners, Ken Griffin’s Citadel Investment Group and Cliff Asness’s AQR Capital Management. In terms of the portfolio weights assigned to each position Polunin Capital allocated the biggest weight to First Solar, Inc. (NASDAQ:FSLR), around 39.35% of its 13F portfolio. Antipodes Partners is also relatively very bullish on the stock, earmarking 2.63 percent of its 13F equity portfolio to FSLR.

Seeing as First Solar, Inc. (NASDAQ:FSLR) has faced bearish sentiment from the aggregate hedge fund industry, it’s safe to say that there lies a certain “tier” of money managers that decided to sell off their positions entirely in the first quarter. Interestingly, Renaissance Technologies dumped the biggest position of all the hedgies tracked by Insider Monkey, totaling close to $31 million in stock, and Principal Global Investors’s Columbus Circle Investors was right behind this move, as the fund sold off about $23.8 million worth. These moves are intriguing to say the least, as aggregate hedge fund interest was cut by 10 funds in the first quarter.

Let’s check out hedge fund activity in other stocks similar to First Solar, Inc. (NASDAQ:FSLR). We will take a look at Pegasystems Inc. (NASDAQ:PEGA), Companhia Siderurgica Nacional (NYSE:SID), WEX Inc (NYSE:WEX), NRG Energy Inc (NYSE:NRG), Under Armour Inc (NYSE:UA), The Middleby Corporation (NASDAQ:MIDD), and Amdocs Limited (NASDAQ:DOX). This group of stocks’ market values are closest to FSLR’s market value.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
PEGA 35 1728264 3
SID 10 60938 1
WEX 26 538269 0
NRG 35 1606143 4
UA 51 1910459 4
MIDD 28 520500 -2
DOX 32 716631 12
Average 31 1011601 3.1

View table here if you experience formatting issues.

As you can see these stocks had an average of 31 hedge funds with bullish positions and the average amount invested in these stocks was $1012 million. That figure was $304 million in FSLR’s case. Under Armour Inc (NYSE:UA) is the most popular stock in this table. On the other hand Companhia Siderurgica Nacional (NYSE:SID) is the least popular one with only 10 bullish hedge fund positions. First Solar, Inc. (NASDAQ:FSLR) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for FSLR is 30.1. Stocks with higher number of hedge fund positions relative to other stocks as well as relative to their historical range receive a higher sentiment score. This is a slightly negative signal and we’d rather spend our time researching stocks that hedge funds are piling on. Our calculations showed that top 5 most popular stocks among hedge funds returned 95.8% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 40 percentage points. These stocks gained 23.8% in 2021 through July 16th and surpassed the market again by 7.7 percentage points. Unfortunately FSLR wasn’t nearly as popular as these 5 stocks (hedge fund sentiment was quite bearish); FSLR investors were disappointed as the stock returned -4.4% since the end of March (through 7/16) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 5 most popular stocks among hedge funds as most of these stocks already outperformed the market in 2021.

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