How Did First Solar, Inc. (FSLR) Compare Against Hedge Fund Darlings in 2019?

We are still in an overall bull market and many stocks that smart money investors were piling into surged in 2019. Among them, Facebook and Microsoft ranked among the top 3 picks and these stocks gained 57% each. Hedge funds’ top 3 stock picks returned 44.6% this year and beat the S&P 500 ETFs by nearly 14 percentage points. Investing in index funds guarantees you average returns, not superior returns. We are looking to generate superior returns for our readers. That’s why we believe it isn’t a waste of time to check out hedge fund sentiment before you invest in a stock like First Solar, Inc. (NASDAQ:FSLR).

Is First Solar, Inc. (NASDAQ:FSLR) the right investment to pursue these days? The smart money is taking a bullish view. The number of long hedge fund positions improved by 6 in recent months. Our calculations also showed that FSLR isn’t among the 30 most popular stocks among hedge funds (click for Q3 rankings and see the video at the end of this article for Q2 rankings).

In the eyes of most market participants, hedge funds are viewed as slow, outdated investment vehicles of years past. While there are greater than 8000 funds in operation at present, We look at the moguls of this club, around 750 funds. These hedge fund managers shepherd the majority of the smart money’s total capital, and by shadowing their inimitable equity investments, Insider Monkey has brought to light numerous investment strategies that have historically beaten Mr. Market. Insider Monkey’s flagship short hedge fund strategy exceeded the S&P 500 short ETFs by around 20 percentage points per annum since its inception in May 2014. Our portfolio of short stocks lost 27.8% since February 2017 (through November 21st) even though the market was up more than 39% during the same period. We just shared a list of 7 short targets in our latest quarterly update .

Ken Griffin

Ken Griffin of Citadel Investment Group

We leave no stone unturned when looking for the next great investment idea. For example Discover is offering this insane cashback card, so we look into shorting the stock. One of the most bullish analysts in America just put his money where his mouth is. He says, “I’m investing more today than I did back in early 2009.” So we check out his pitch. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. We even check out this option genius’ weekly trade ideas. This December, we recommended Adams Energy as a one-way bet based on an under-the-radar fund manager’s investor letter and the stock already gained 20 percent. Now we’re going to take a glance at the latest hedge fund action regarding First Solar, Inc. (NASDAQ:FSLR).

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

At the end of the third quarter, a total of 30 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 25% from the previous quarter. By comparison, 14 hedge funds held shares or bullish call options in FSLR a year ago. With hedgies’ positions undergoing their usual ebb and flow, there exists an “upper tier” of key hedge fund managers who were increasing 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 $54.3 million worth of stock at the end of September. It was followed by Citadel Investment Group with a $43.8 million position. Other investors bullish on the company included Lion Point, Point72 Asset Management, and Millennium Management. In terms of the portfolio weights assigned to each position Lion Point allocated the biggest weight to First Solar, Inc. (NASDAQ:FSLR), around 3.96% of its 13F portfolio. Electron Capital Partners is also relatively very bullish on the stock, designating 3.15 percent of its 13F equity portfolio to FSLR.

Consequently, some big names were breaking ground themselves. Lion Point, managed by Didric Cederholm, established the largest position in First Solar, Inc. (NASDAQ:FSLR). Lion Point had $35.5 million invested in the company at the end of the quarter. Paul Marshall and Ian Wace’s Marshall Wace also made a $4.7 million investment in the stock during the quarter. The following funds were also among the new FSLR investors: Matthew Hulsizer’s PEAK6 Capital Management, Philip Hempleman’s Ardsley Partners, and Donald Sussman’s Paloma Partners.

Let’s also examine hedge fund activity in other stocks similar to First Solar, Inc. (NASDAQ:FSLR). These stocks are Ciena Corporation (NASDAQ:CIEN), Anaplan, Inc. (NYSE:PLAN), Owl Rock Capital Corporation (NYSE:ORCC), and Brixmor Property Group Inc (NYSE:BRX). This group of stocks’ market values resemble FSLR’s market value.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
CIEN 29 489215 -7
PLAN 42 2009371 5
ORCC 6 141871 6
BRX 16 118738 1
Average 23.25 689799 1.25

View table here if you experience formatting issues.

As you can see these stocks had an average of 23.25 hedge funds with bullish positions and the average amount invested in these stocks was $690 million. That figure was $347 million in FSLR’s case. Anaplan, Inc. (NYSE:PLAN) is the most popular stock in this table. On the other hand Owl Rock Capital Corporation (NYSE:ORCC) is the least popular one with only 6 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 20 most popular stocks among hedge funds returned 41.1% in 2019 through December 23rd and outperformed the S&P 500 ETF (SPY) by 10.1 percentage points. Hedge funds were also right about betting on FSLR, though not to the same extent, as the stock returned 36.3% during 2019 (as of 12/23) and outperformed the market as well.
5 Most Popular Stocks Among Hedge Funds
Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.

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