Technology stocks had a lousy start to 2022. QQQ lost 9% of its value in January. Pandemic winners are getting crushed while energy stocks are surging. Roblox lost 36%, Moderna lost 33%, and Carvana and Shopify lost 30% of their values in January. We aren’t certain about the bubbly technology stocks that trade for ridiculously high multiples of their revenues, but we believe top hedge fund stocks will deliver positive returns for the rest of the year. In this article, we will take a closer look at hedge fund sentiment towards Sunrun Inc (NASDAQ:RUN) at the end of the third quarter and determine whether the smart money was really smart about this stock.
Is Sunrun Inc (NASDAQ:RUN) the right investment to pursue these days? The smart money was taking a pessimistic view. The number of long hedge fund positions dropped by 8 in recent months. Sunrun Inc (NASDAQ:RUN) was in 37 hedge funds’ portfolios at the end of the third quarter of 2021. The all time high for this statistic is 48. Our calculations also showed that RUN isn’t among the 30 most popular stocks among hedge funds (click for Q3 rankings).
At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, lithium prices have more than doubled over the past year, so we go through lists like the 10 best EV 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. Keeping this in mind let’s review the latest hedge fund action regarding Sunrun Inc (NASDAQ:RUN).
Clint Carlson of Carlson Capital
Do Hedge Funds Think RUN Is A Good Stock To Buy Now?
At Q3’s end, a total of 37 of the hedge funds tracked by Insider Monkey were long this stock, a change of -18% from one quarter earlier. By comparison, 29 hedge funds held shares or bullish call options in RUN a year ago. So, let’s examine which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
The largest stake in Sunrun Inc (NASDAQ:RUN) was held by Coatue Management, which reported holding $418.3 million worth of stock at the end of September. It was followed by Viking Global with a $387.2 million position. Other investors bullish on the company included Tiger Global Management LLC, Orbis Investment Management, and Point State Capital. In terms of the portfolio weights assigned to each position Quaero Capital allocated the biggest weight to Sunrun Inc (NASDAQ:RUN), around 3.72% of its 13F portfolio. Autonomy Capital is also relatively very bullish on the stock, designating 2.61 percent of its 13F equity portfolio to RUN.
Since Sunrun Inc (NASDAQ:RUN) has witnessed declining sentiment from the aggregate hedge fund industry, we can see that there is a sect of money managers who sold off their entire stakes by the end of the third quarter. Intriguingly, Zach Schreiber’s Point State Capital sold off the largest position of the 750 funds monitored by Insider Monkey, totaling close to $92 million in stock, and Glen Kacher’s Light Street Capital was right behind this move, as the fund sold off about $36.7 million worth. These moves are interesting, as aggregate hedge fund interest dropped by 8 funds by the end of the third quarter.
Let’s also examine hedge fund activity in other stocks – not necessarily in the same industry as Sunrun Inc (NASDAQ:RUN) but similarly valued. These stocks are Ascendis Pharma A/S (NASDAQ:ASND), Globe Life Inc. (NYSE:GL), Syneos Health, Inc. (NASDAQ:SYNH), Reliance Steel & Aluminum Co. (NYSE:RS), GXO Logistics Inc. (NYSE:GXO), Crocs, Inc. (NASDAQ:CROX), and First Horizon Corporation (NYSE:FHN). This group of stocks’ market values are closest to RUN’s market value.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| ASND | 23 | 2827508 | -6 |
| GL | 27 | 775771 | -1 |
| SYNH | 33 | 474708 | 0 |
| RS | 24 | 346919 | -3 |
| GXO | 27 | 1313274 | 27 |
| CROX | 37 | 1051423 | -3 |
| FHN | 24 | 103547 | -3 |
| Average | 27.9 | 984736 | 1.6 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 27.9 hedge funds with bullish positions and the average amount invested in these stocks was $985 million. That figure was $1678 million in RUN’s case. Crocs, Inc. (NASDAQ:CROX) is the most popular stock in this table. On the other hand Ascendis Pharma A/S (NASDAQ:ASND) is the least popular one with only 23 bullish hedge fund positions. Sunrun Inc (NASDAQ:RUN) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for RUN is 70.1. 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 positive signal but 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 29.6% in 2021 and beat the market again by 3.6 percentage points. Unfortunately, RUN wasn’t nearly as popular as these 5 stocks and hedge funds that were betting on RUN were disappointed as the stock returned -41.1% since the end of September (through 1/31) 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 all of these stocks already outperformed the market since 2019.
Follow Sunrun Inc. (NASDAQ:RUN)
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Disclosure: None. This article was originally published at Insider Monkey.
