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SunEdison’s Bankruptcy Does Not Scare Hedge Funds Away From Solar

SunEdison, once the fastest-growing U.S. renewable energy company, filed for bankruptcy protection in April after its multi-billion-dollar acquisition spree resulted in unmanageable debt levels. The clean-power giant recorded $16.1 billion of debt in its bankruptcy filing, which makes it the biggest bankruptcy in the past year or so. Meanwhile, SunEdison’s two-publicly-traded subsidiaries, which were formed to buy the parent company’s clean-energy power plants, were not part of the bankruptcy. Nonetheless, solar project developers continue to enjoy robust demand despite investor concerns over a possible decline in demand due to weaker crude oil prices. However, other solar project developers in the industry do not seem doomed to the same fate as SunEdison, so the hedge fund industry has not been eschewing itself from channeling more capital into solar companies’ securities. Having this in mind, the following article will lay out a list of five most popular solar stocks, which includes SunEdison’s publicly-traded satellites.

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At Insider Monkey, we track around 730 hedge funds and institutional investors. Through extensive backtests, we have determined that imitating some of the stocks that these investors are collectively bullish on can help retail investors generate double digits of alpha per year. The key is to focus on the small-cap picks of these funds, which are usually less followed by the broader market and allow for larger price inefficiencies (see more details about our small-cap strategy).

#5. SunPower Corporation (NASDAQ:SPWR)

– Investors with long positions as of March 31: 15

– Aggregate value of investors’ holdings as of March 31: $161.85 Million

The hedge fund sentiment towards SunPower Corporation (NASDAQ:SPWR) declined during the first quarter of 2016, as the number of funds included in our database with stakes in the company dropped to 15 from 22 quarter-over-quarter. Similarly, the aggregate value of those hedge funds’ stakes decreased to $161.85 million from $163.84 million. The global energy company has seen its market value decline by 41% since the beginning of the year, as the company posted a wider-than-expected first-quarter net loss and issued disappointing guidance for the second quarter. Gordon Johnson of Axiom Capital Research, who rates the installer of residential solar systems a ‘Sell’, recently asserted that SunPower’s installations in 2016 will be significantly below the company’s guidance of 1.6 gigawatts-to-1.9 gigawatts due to “poor bookings execution”. A possible sizable negative guidance revision may put significant weight on SunPower’s stock performance. Steven Cohen’s Point72 Asset Management owns nearly 2.00 million shares of SunPower Corporation (NASDAQ:SPWR) as of March 31.

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