Is Maxeon Solar (MAXN) A Good Stock To Buy Now?

We at Insider Monkey have gone over 817 13F filings that hedge funds and prominent investors are required to file by the SEC The 13F filings show the funds’ and investors’ portfolio positions as of September 30th. In this article, we look at what those funds think of Maxeon Solar Technologies, Ltd. (NASDAQ:MAXN) based on that data.

Is Maxeon Solar (MAXN) a good stock to buy now? The smart money is getting more optimistic. The number of bullish hedge fund bets rose by 5 in recent months. Maxeon Solar Technologies, Ltd. (NASDAQ:MAXN) was in 5 hedge funds’ portfolios at the end of September. Our calculations also showed that MAXN 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.

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 was able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by more than 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.

Thomas Claugus of GMT Capital

At Insider Monkey we scour multiple sources to uncover the next great investment idea. For example, Federal Reserve has been creating trillions of dollars electronically to keep the interest rates near zero. We believe this will lead to inflation and boost real estate prices. So, we recommended this real estate stock to our monthly premium newsletter subscribers. We go through lists like the 15 best blue chip stocks 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. With all of this in mind let’s take a look at the latest hedge fund action encompassing Maxeon Solar Technologies, Ltd. (NASDAQ:MAXN).

What have hedge funds been doing with Maxeon Solar Technologies, Ltd. (NASDAQ:MAXN)?

At third quarter’s end, a total of 5 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 5 from one quarter earlier. The graph below displays the number of hedge funds with bullish position in MAXN over the last 21 quarters. So, let’s examine which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

More specifically, Highbridge Capital Management was the largest shareholder of Maxeon Solar Technologies, Ltd. (NASDAQ:MAXN), with a stake worth $5.4 million reported as of the end of September. Trailing Highbridge Capital Management was Aristeia Capital, which amassed a stake valued at $4.2 million. GMT Capital, Millennium Management, and MAK Capital One 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 MAK Capital One allocated the biggest weight to Maxeon Solar Technologies, Ltd. (NASDAQ:MAXN), around 0.99% of its 13F portfolio. Highbridge Capital Management is also relatively very bullish on the stock, earmarking 0.29 percent of its 13F equity portfolio to MAXN.

As one would reasonably expect, specific money managers were leading the bulls’ herd. Highbridge Capital Management, created the largest position in Maxeon Solar Technologies, Ltd. (NASDAQ:MAXN). Highbridge Capital Management had $5.4 million invested in the company at the end of the quarter. Robert Henry Lynch’s Aristeia Capital also made a $4.2 million investment in the stock during the quarter. The other funds with new positions in the stock are Thomas E. Claugus’s GMT Capital, Michael Kaufman’s MAK Capital One, and D. E. Shaw’s D E Shaw.

Let’s now take a look at hedge fund activity in other stocks – not necessarily in the same industry as Maxeon Solar Technologies, Ltd. (NASDAQ:MAXN) but similarly valued. We will take a look at, Inc. (NASDAQ:PRTS), Great Southern Bancorp, Inc. (NASDAQ:GSBC), NGL Energy Partners LP (NYSE:NGL), Aprea Therapeutics, Inc. (NASDAQ:APRE), Berkshire Hills Bancorp, Inc. (NYSE:BHLB), United Fire Group, Inc. (NASDAQ:UFCS), and Banc of California, Inc. (NYSE:BANC). This group of stocks’ market valuations are similar to MAXN’s market valuation.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
PRTS 22 149170 8
GSBC 7 20795 -3
NGL 2 695 -2
APRE 9 132886 -2
BHLB 13 20919 -4
UFCS 8 10565 2
BANC 13 32302 0
Average 10.6 52476 -0.1

View table here if you experience formatting issues.

As you can see these stocks had an average of 10.6 hedge funds with bullish positions and the average amount invested in these stocks was $52 million. That figure was $18 million in MAXN’s case., Inc. (NASDAQ:PRTS) is the most popular stock in this table. On the other hand NGL Energy Partners LP (NYSE:NGL) is the least popular one with only 2 bullish hedge fund positions. Maxeon Solar Technologies, Ltd. (NASDAQ:MAXN) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for MAXN is 22. 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 November 27th and still beat the market by 16.1 percentage points. A small number of hedge funds were also right about betting on MAXN as the stock returned 47.9% since the end of the third quarter (through 11/27) and outperformed the market by an even larger margin.

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