Here’s What Hedge Funds Think About TerraForm Power Inc (TERP)

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 March. At Insider Monkey, we follow nearly 750 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 TerraForm Power Inc (NASDAQ:TERP), so let’s take a closer look at the sentiment that surrounds it in the current quarter.

Is TerraForm Power Inc (NASDAQ:TERP) a first-rate investment now? Prominent investors are in an optimistic mood. The number of bullish hedge fund bets improved by 3 in recent months. Our calculations also showed that terp isn’t among the 30 most popular stocks among hedge funds.

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 has shown that hedge funds’ large-cap stock picks indeed failed to beat the market between 1999 and 2016. However, we were able to identify in advance a select group of hedge fund holdings that outperformed the market by 40 percentage points since May 2014 through May 30, 2019 (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 30.9% through May 30, 2019. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.

Bernard Lambilliotte - Ecofin

Let’s check out the latest hedge fund action regarding TerraForm Power Inc (NASDAQ:TERP).

Hedge fund activity in TerraForm Power Inc (NASDAQ:TERP)

At Q1’s end, a total of 11 of the hedge funds tracked by Insider Monkey were long this stock, a change of 38% from the previous quarter. The graph below displays the number of hedge funds with bullish position in TERP over the last 15 quarters. So, let’s check out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

No of Hedge Funds with TERP Positions

Among these funds, Strategic Value Partners held the most valuable stake in TerraForm Power Inc (NASDAQ:TERP), which was worth $118.2 million at the end of the first quarter. On the second spot was Renaissance Technologies which amassed $55.2 million worth of shares. Moreover, D E Shaw, Ecofin Ltd, and Arrowstreet Capital were also bullish on TerraForm Power Inc (NASDAQ:TERP), allocating a large percentage of their portfolios to this stock.

As industrywide interest jumped, specific money managers were breaking ground themselves. Ecofin Ltd, managed by Bernard Lambilliotte, assembled the most valuable position in TerraForm Power Inc (NASDAQ:TERP). Ecofin Ltd had $10.4 million invested in the company at the end of the quarter. Peter Rathjens, Bruce Clarke and John Campbell’s Arrowstreet Capital also initiated a $9.4 million position during the quarter. The other funds with brand new TERP positions are Israel Englander’s Millennium Management, Matthew Hulsizer’s PEAK6 Capital Management, and Paul Tudor Jones’s Tudor Investment Corp.

Let’s also examine hedge fund activity in other stocks – not necessarily in the same industry as TerraForm Power Inc (NASDAQ:TERP) but similarly valued. These stocks are AmeriGas Partners, L.P. (NYSE:APU), Sensient Technologies Corporation (NYSE:SXT), Hilton Grand Vacations Inc. (NYSE:HGV), and Monro, Inc. (NASDAQ:MNRO). This group of stocks’ market caps are closest to TERP’s market cap.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
APU 6 9263 2
SXT 8 65991 -7
HGV 37 763891 9
MNRO 17 270085 -1
Average 17 277308 0.75

View table here if you experience formatting issues.

As you can see these stocks had an average of 17 hedge funds with bullish positions and the average amount invested in these stocks was $277 million. That figure was $221 million in TERP’s case. Hilton Grand Vacations Inc. (NYSE:HGV) is the most popular stock in this table. On the other hand AmeriGas Partners, L.P. (NYSE:APU) is the least popular one with only 6 bullish hedge fund positions. TerraForm Power Inc (NASDAQ:TERP) 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 TERP, though not to the same extent, as the stock returned 5.3% during the same time frame and outperformed the market as well.

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