Is SEDG A Good Stock To Buy According To Hedge Funds?

In this article we will analyze whether Solaredge Technologies Inc (NASDAQ:SEDG) is a good investment right now by following the lead of some of the best investors in the world and piggybacking their ideas. There’s no better way to get these firms’ immense resources and analytical capabilities working for us than to follow their lead into their best ideas. While not all of these picks will be winners, our research shows that these picks historically outperformed the market by double digits annually.

Is SEDG a good stock to buy? Solaredge Technologies Inc (NASDAQ:SEDG) investors should be aware of an increase in activity from the world’s largest hedge funds in recent months. Solaredge Technologies Inc (NASDAQ:SEDG) was in 31 hedge funds’ portfolios at the end of the third quarter of 2020. The all time high for this statistic is 28. This means the bullish number of hedge fund positions in this stock currently sits at its all time high. There were 25 hedge funds in our database with SEDG positions at the end of the second quarter. Our calculations also showed that SEDG 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.

If you’d ask most investors, hedge funds are viewed as underperforming, outdated investment tools of years past. While there are greater than 8000 funds with their doors open today, Our experts look at the upper echelon of this club, about 850 funds. Most estimates calculate that this group of people control the lion’s share of the hedge fund industry’s total asset base, and by following their best investments, Insider Monkey has discovered many investment strategies that have historically outperformed the market. Insider Monkey’s flagship short hedge fund strategy outperformed the S&P 500 short ETFs by around 20 percentage points per year since its inception in March 2017. Our portfolio of short stocks lost 13% since February 2017 (through November 17th) even though the market was up 65% during the same period. We just shared a list of 6 short targets in our latest quarterly update .

Matthew Hulsizer PEAK6 Capital

Matthew Hulsizer of PEAK6 Capital

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. With all of this in mind we’re going to analyze the latest hedge fund action regarding Solaredge Technologies Inc (NASDAQ:SEDG).

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

At the end of September, a total of 31 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 24% from the previous quarter. Below, you can check out the change in hedge fund sentiment towards SEDG over the last 21 quarters. So, let’s review which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

Among these funds, Impax Asset Management held the most valuable stake in Solaredge Technologies Inc (NASDAQ:SEDG), which was worth $114.1 million at the end of the third quarter. On the second spot was Polar Capital which amassed $91.5 million worth of shares. D E Shaw, Renaissance Technologies, 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 Noked Capital allocated the biggest weight to Solaredge Technologies Inc (NASDAQ:SEDG), around 13.07% of its 13F portfolio. Tenzing Global Investors is also relatively very bullish on the stock, earmarking 4.81 percent of its 13F equity portfolio to SEDG.

With a general bullishness amongst the heavyweights, key hedge funds were leading the bulls’ herd. Electron Capital Partners, managed by Jos Shaver, initiated the biggest position in Solaredge Technologies Inc (NASDAQ:SEDG). Electron Capital Partners had $15.4 million invested in the company at the end of the quarter. Peter Muller’s PDT Partners also made a $9.2 million investment in the stock during the quarter. The other funds with brand new SEDG positions are Louis Bacon’s Moore Global Investments, Brandon Haley’s Holocene Advisors, and Matthew Hulsizer’s PEAK6 Capital Management.

Let’s also examine hedge fund activity in other stocks – not necessarily in the same industry as Solaredge Technologies Inc (NASDAQ:SEDG) but similarly valued. These stocks are Zendesk Inc (NYSE:ZEN), Arch Capital Group Ltd. (NASDAQ:ACGL), M&T Bank Corporation (NYSE:MTB), Atmos Energy Corporation (NYSE:ATO), Wabtec Corporation (NYSE:WAB), Live Nation Entertainment, Inc. (NYSE:LYV), and Pembina Pipeline Corp (NYSE:PBA). This group of stocks’ market values resemble SEDG’s market value.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
ZEN 59 1680411 -4
ACGL 41 1229443 5
MTB 35 503738 5
ATO 18 110743 -4
WAB 38 1732099 -1
LYV 50 1716514 6
PBA 12 56123 2
Average 36.1 1004153 1.3

View table here if you experience formatting issues.

As you can see these stocks had an average of 36.1 hedge funds with bullish positions and the average amount invested in these stocks was $1004 million. That figure was $553 million in SEDG’s case. Zendesk Inc (NYSE:ZEN) is the most popular stock in this table. On the other hand Pembina Pipeline Corp (NYSE:PBA) is the least popular one with only 12 bullish hedge fund positions. Solaredge Technologies Inc (NASDAQ:SEDG) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for SEDG is 60.2. 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 33.3% in 2020 through December 18th and still beat the market by 16.4 percentage points. A small number of hedge funds were also right about betting on SEDG as the stock returned 31.9% since the end of the third quarter (through 12/18) and outperformed the market by an even larger margin.

Follow Solaredge Technologies Inc. (NASDAQ:SEDG)

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