SolarCity Corp (SCTY)’s Smartest Investors Are Doing What Now?

SolarCity Corp (NASDAQ:SCTY) has seen an increase in hedge fund sentiment in recent months.

In the eyes of most stock holders, hedge funds are seen as worthless, old investment vehicles of years past. While there are greater than 8000 funds in operation at the moment, we hone in on the crème de la crème of this group, around 450 funds. It is estimated that this group has its hands on the majority of the smart money’s total capital, and by tracking their highest performing investments, we have discovered a few investment strategies that have historically beaten the S&P 500 index. Our small-cap hedge fund strategy beat the S&P 500 index by 18 percentage points a year for a decade in our back tests, and since we’ve began to sharing our picks with our subscribers at the end of August 2012, we have outperformed the S&P 500 index by 23.3 percentage points in 8 months (check out a sample of our picks).

Just as important, bullish insider trading activity is a second way to break down the investments you’re interested in. Obviously, there are many incentives for an upper level exec to get rid of shares of his or her company, but just one, very simple reason why they would behave bullishly. Several empirical studies have demonstrated the impressive potential of this tactic if shareholders understand what to do (learn more here).

Keeping this in mind, we’re going to take a gander at the recent action surrounding SolarCity Corp (NASDAQ:SCTY).

Hedge fund activity in SolarCity Corp (NASDAQ:SCTY)

At the end of the first quarter, a total of 8 of the hedge funds we track were bullish in this stock, a change of 14% from one quarter earlier. With the smart money’s capital changing hands, there exists a few key hedge fund managers who were boosting their stakes meaningfully.

According to our comprehensive database, Generation Investment Management, managed by David Blood and Al Gore, holds the most valuable position in SolarCity Corp (NASDAQ:SCTY). Generation Investment Management has a $79.9 million position in the stock, comprising 1.6% of its 13F portfolio. On Generation Investment Management’s heels is John A. Levin of Levin Capital Strategies, with a $5.6 million position; 0.1% of its 13F portfolio is allocated to the company. Remaining hedge funds that are bullish include Richard Driehaus’s Driehaus Capital, Philip Hempleman’s Ardsley Partners and Ken Griffin’s Citadel Investment Group.

Consequently, specific money managers were leading the bulls’ herd. Ardsley Partners, managed by Philip Hempleman, created the most valuable position in SolarCity Corp (NASDAQ:SCTY). Ardsley Partners had 0.9 million invested in the company at the end of the quarter. Ken Griffin’s Citadel Investment Group also initiated a $0.5 million position during the quarter. The other funds with brand new SCTY positions are Louis Bacon’s Moore Global Investments, Paul Marshall and Ian Wace’s Marshall Wace LLP, and Ken Griffin’s Citadel Investment Group.

How are insiders trading SolarCity Corp (NASDAQ:SCTY)?

Bullish insider trading is best served when the company in question has experienced transactions within the past six months. Over the last half-year time frame, SolarCity Corp (NASDAQ:SCTY) has experienced 0 unique insiders buying, and 0 insider sales (see the details of insider trades here).

With the returns demonstrated by Insider Monkey’s tactics, retail investors must always monitor hedge fund and insider trading activity, and SolarCity Corp (NASDAQ:SCTY) shareholders fit into this picture quite nicely.

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