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Is First Solar, Inc. (FSLR) Going To Burn These Hedge Funds ?

Amid an overall bull market, many stocks that smart money investors were collectively bullish on surged through the end of November. Among them, Facebook and Microsoft ranked among the top 3 picks and these stocks gained 54% and 51% respectively. Our research shows that most of the stocks that smart money likes historically generate strong risk-adjusted returns. That’s why we weren’t surprised when hedge funds’ top 20 large-cap stock picks generated a return of 37.4% through the end of November and outperformed the broader market benchmark by 9.9 percentage points.This is why following the smart money sentiment is a useful tool at identifying the next stock to invest in.

Is First Solar, Inc. (NASDAQ:FSLR) a marvelous investment today? The best stock pickers are betting on the stock. The number of long hedge fund positions rose by 6 lately. 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 below for Q2 rankings). FSLR was in 30 hedge funds’ portfolios at the end of September. There were 24 hedge funds in our database with FSLR holdings at the end of the previous quarter.
5 Most Popular Stocks Among Hedge Funds
Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.

To the average investor there are a multitude of tools stock market investors have at their disposal to value stocks. A couple of the best tools are hedge fund and insider trading interest. Our experts have shown that, historically, those who follow the top picks of the best investment managers can outperform their index-focused peers by a healthy margin (see the details here).

Didric Cederholm Lion Point Capital

Didric Cederholm of Lion Point

Unlike the largest US hedge funds that are convinced Dow will soar past 40,000 or the world’s most bearish hedge fund that’s more convinced than ever that a crash is coming, our long-short investment strategy doesn’t rely on bull or bear markets to deliver double digit returns. We only rely on the best performing hedge funds‘ buy/sell signals. We’re going to view the key hedge fund action surrounding First Solar, Inc. (NASDAQ:FSLR).

What have hedge funds been doing with First Solar, Inc. (NASDAQ:FSLR)?

Heading into the fourth quarter of 2019, a total of 30 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 25% from the second quarter of 2019. Below, you can check out the change in hedge fund sentiment towards FSLR over the last 17 quarters. So, let’s find out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

FSLR_dec2019

Of the funds tracked by Insider Monkey, Alex Snow’s Lansdowne Partners has the largest position in First Solar, Inc. (NASDAQ:FSLR), worth close to $54.3 million, accounting for 1.4% of its total 13F portfolio. The second largest stake is held by Ken Griffin of Citadel Investment Group, with a $43.8 million position; less than 0.1%% of its 13F portfolio is allocated to the company. Other peers with similar optimism comprise Didric Cederholm’s Lion Point, Steve Cohen’s Point72 Asset Management and Israel Englander’s 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 portfolio. Electron Capital Partners is also relatively very bullish on the stock, designating 3.15 percent of its 13F equity portfolio to FSLR.

As one would reasonably expect, some big names have been driving this bullishness. Lion Point, managed by Didric Cederholm, assembled 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 now review hedge fund activity in other stocks similar to First Solar, Inc. (NASDAQ:FSLR). We will take a look at Ciena Corporation (NYSE:CIEN), Anaplan, Inc. (NYSE:PLAN), Owl Rock Capital Corporation (NYSE:ORCC), and Brixmor Property Group Inc (NYSE:BRX). This group of stocks’ market valuations are similar to FSLR’s market valuation.

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. 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 20 most popular stocks among hedge funds returned 37.4% in 2019 through the end of November and outperformed the S&P 500 ETF (SPY) by 9.9 percentage points. Unfortunately FSLR wasn’t nearly as popular as these 20 stocks and hedge funds that were betting on FSLR were disappointed as the stock returned -4.8% during the fourth quarter (through the end of November) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 20 most popular stocks among hedge funds as many of these stocks already outperformed the market so far this year.

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

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