Dear Valued Visitor,

We have noticed that you are using an ad blocker software.

Although advertisements on the web pages may degrade your experience, our business certainly depends on them and we can only keep providing you high-quality research based articles as long as we can display ads on our pages.

To view this article, you can disable your ad blocker and refresh this page or simply login.

We only allow registered users to use ad blockers. You can sign up for free by clicking here or you can login if you are already a member.

Is TerraForm Power Inc (TERP) A Good Stock To Buy?

World-class money managers like Ken Griffin and Barry Rosenstein only invest their wealthy clients’ money after undertaking a rigorous examination of any potential stock. They are particularly successful in this regard when it comes to small-cap stocks, which their peerless research gives them a big information advantage on when it comes to judging their worth. It’s not surprising then that they generate their biggest returns from these stocks and invest more of their money in these stocks on average than other investors. It’s also not surprising then that we pay close attention to these picks ourselves and have built a market-beating investment strategy around them.

Is TerraForm Power Inc (NASDAQ:TERP) a safe investment now? Investors who are in the know are becoming less confident. The number of long hedge fund positions fell by 6 recently. Our calculations also showed that TERP isn’t among the 30 most popular stocks among hedge funds.

In today’s marketplace there are dozens of formulas stock traders put to use to assess their holdings. A couple of the most underrated formulas are hedge fund and insider trading indicators. Our experts have shown that, historically, those who follow the best picks of the best fund managers can trounce the S&P 500 by a significant margin (see the details here).

Appaloosa Management Lp

Let’s take a peek at the key hedge fund action regarding TerraForm Power Inc (NASDAQ:TERP).

What does the smart money think about TerraForm Power Inc (NASDAQ:TERP)?

At the end of the fourth quarter, a total of 8 of the hedge funds tracked by Insider Monkey were long this stock, a change of -43% from one quarter earlier. By comparison, 13 hedge funds held shares or bullish call options in TERP a year ago. With the smart money’s sentiment swirling, there exists an “upper tier” of noteworthy hedge fund managers who were upping their holdings considerably (or already accumulated large positions).

TERP_apr2019

Among these funds, Strategic Value Partners held the most valuable stake in TerraForm Power Inc (NASDAQ:TERP), which was worth $112.6 million at the end of the third quarter. On the second spot was Appaloosa Management LP which amassed $30.1 million worth of shares. Moreover, Renaissance Technologies, D E Shaw, and Highbridge Capital Management were also bullish on TerraForm Power Inc (NASDAQ:TERP), allocating a large percentage of their portfolios to this stock.

Because TerraForm Power Inc (NASDAQ:TERP) has witnessed bearish sentiment from hedge fund managers, it’s easy to see that there was a specific group of money managers that slashed their positions entirely heading into Q3. It’s worth mentioning that Bernard Lambilliotte’s Ecofin Ltd dumped the largest position of the 700 funds watched by Insider Monkey, comprising an estimated $8.8 million in stock, and Michael Platt and William Reeves’s BlueCrest Capital Mgmt. was right behind this move, as the fund said goodbye to about $0.9 million worth. These transactions are interesting, as total hedge fund interest was cut by 6 funds heading into Q3.

Let’s go over hedge fund activity in other stocks similar to TerraForm Power Inc (NASDAQ:TERP). We will take a look at Tegna Inc (NYSE:TGNA), Retail Properties of America Inc (NYSE:RPAI), Meredith Corporation (NYSE:MDP), and Genworth Financial Inc (NYSE:GNW). All of these stocks’ market caps match TERP’s market cap.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
TGNA 22 309181 -1
RPAI 15 175160 1
MDP 12 312287 -5
GNW 22 70350 0
Average 17.75 216745 -1.25

View table here if you experience formatting issues.

As you can see these stocks had an average of 17.75 hedge funds with bullish positions and the average amount invested in these stocks was $217 million. That figure was $192 million in TERP’s case. Tegna Inc (NYSE:TGNA) is the most popular stock in this table. On the other hand Meredith Corporation (NYSE:MDP) is the least popular one with only 12 bullish hedge fund positions. Compared to these stocks TerraForm Power Inc (NASDAQ:TERP) is even less popular than MDP. Our calculations showed that top 15 most popular stocks) among hedge funds returned 24.2% through April 22nd and outperformed the S&P 500 ETF (SPY) by more than 7 percentage points. A small number of hedge funds were also right about betting on TERP, though not to the same extent, as the stock returned 21.9% and outperformed the market as well.

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

DOWNLOAD FREE REPORT: Warren Buffett's Best Stock Picks

Let Warren Buffett, George Soros, Steve Cohen, and Daniel Loeb WORK FOR YOU.

If you want to beat the low cost index funds by 19 percentage points per year, look no further than our monthly newsletter.In this free report you can find an in-depth analysis of the performance of Warren Buffett's entire historical stock picks. We uncovered Warren Buffett's Best Stock Picks and a way to for Buffett to improve his returns by more than 4 percentage points per year.

Bonus Biotech Stock Pick: You can also find a detailed bonus biotech stock pick that we expect to return more than 50% within 12 months.
Subscribe me to Insider Monkey's Free Daily Newsletter
This is a FREE report from Insider Monkey. Credit Card is NOT required.
Loading...