Is FSLR A Good Stock To Buy Now?

The Insider Monkey team has completed processing the quarterly 13F filings for the September quarter submitted by the hedge funds and other money managers included in our extensive database. Most hedge fund investors experienced strong gains on the back of a strong market performance, which certainly propelled them to adjust their equity holdings so as to maintain the desired risk profile. As a result, the relevancy of these public filings and their content is indisputable, as they may reveal numerous high-potential stocks. The following article will discuss the smart money sentiment towards First Solar, Inc. (NASDAQ:FSLR).

Is FSLR a good stock to buy now? First Solar, Inc. (NASDAQ:FSLR) was in 40 hedge funds’ portfolios at the end of September. The all time high for this statistic is 34. This means the bullish number of hedge fund positions in this stock currently sits at its all time high. FSLR has seen an increase in enthusiasm from smart money recently. There were 16 hedge funds in our database with FSLR positions at the end of the second quarter. 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 for a quick look at the top 5 stocks).

Video: Watch our video about the top 5 most popular hedge fund stocks.

Why do we pay any attention at all to hedge fund sentiment? Our research has shown that a select group of hedge fund holdings outperformed the S&P 500 ETFs by 66 percentage points since March 2017 (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 13% through November 17th. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.

Ian Wace Marshall Wace

Ian Wace of Marshall Wace

At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, the House passed a landmark bill decriminalizing marijuana. So, we are checking out this under the radar cannabis stock right now. We go through lists like the 15 best blue chip stocks to buy to pick the best large-cap stocks to buy. 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 website. Keeping this in mind we’re going to take a look at the fresh hedge fund action regarding First Solar, Inc. (NASDAQ:FSLR).

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

At Q3’s end, a total of 40 of the hedge funds tracked by Insider Monkey were long this stock, a change of 150% from one quarter earlier. On the other hand, there were a total of 32 hedge funds with a bullish position in FSLR a year ago. So, let’s see which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

More specifically, Masters Capital Management was the largest shareholder of First Solar, Inc. (NASDAQ:FSLR), with a stake worth $66.2 million reported as of the end of September. Trailing Masters Capital Management was Lansdowne Partners, which amassed a stake valued at $59 million. Citadel Investment Group, Millennium Management, and Citadel Investment Group were also very fond of the stock, becoming one of the largest hedge fund holders of the company. In terms of the portfolio weights assigned to each position Bronson Point Partners allocated the biggest weight to First Solar, Inc. (NASDAQ:FSLR), around 5.31% of its 13F portfolio. Masters Capital Management is also relatively very bullish on the stock, dishing out 4.4 percent of its 13F equity portfolio to FSLR.

With a general bullishness amongst the heavyweights, some big names have jumped into First Solar, Inc. (NASDAQ:FSLR) headfirst. Millennium Management, managed by Israel Englander, established the most outsized position in First Solar, Inc. (NASDAQ:FSLR). Millennium Management had $38.1 million invested in the company at the end of the quarter. Principal Global Investors’s Columbus Circle Investors also made a $15.2 million investment in the stock during the quarter. The other funds with brand new FSLR positions are Anand Parekh’s Alyeska Investment Group, Paul Marshall and Ian Wace’s Marshall Wace LLP, and Paul Tudor Jones’s Tudor Investment Corp.

Let’s check out hedge fund activity in other stocks – not necessarily in the same industry as First Solar, Inc. (NASDAQ:FSLR) but similarly valued. These stocks are Vereit Inc (NYSE:VER), Cree, Inc. (NASDAQ:CREE), AMERCO (NASDAQ:UHAL), IAA, Inc. (NYSE:IAA), Store Capital Corporation (NYSE:STOR), Mohawk Industries, Inc. (NYSE:MHK), and GFL Environmental Inc. (NYSE:GFL). 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
VER 18 543958 -5
CREE 30 650447 13
UHAL 19 437403 -1
IAA 36 1299677 -7
STOR 20 763350 4
MHK 41 701743 9
GFL 20 361757 4
Average 26.3 679762 2.4

View table here if you experience formatting issues.

As you can see these stocks had an average of 26.3 hedge funds with bullish positions and the average amount invested in these stocks was $680 million. That figure was $284 million in FSLR’s case. Mohawk Industries, Inc. (NYSE:MHK) is the most popular stock in this table. On the other hand Vereit Inc (NYSE:VER) is the least popular one with only 18 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 overall hedge fund sentiment score for FSLR is 87.8. 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. Our calculations showed that top 20 most popular stocks among hedge funds returned 41.3% in 2019 and outperformed the S&P 500 ETF (SPY) by 10 percentage points. These stocks gained 30.7% in 2020 through December 14th and still beat the market by 15.8 percentage points. Hedge funds were also right about betting on FSLR as the stock returned 30.8% since the end of Q3 (through 12/14) and outperformed the market. Hedge funds were rewarded for their relative bullishness.

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