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Trump’s Executive Order Puts First Solar, Inc. (FSLR) in the Spotlight

First Solar, Inc. (NASDAQ:FSLR) is in the spotlight after CNN reported that President Donald Trump will sign an executive order today to curb the U.S. federal government’s enforcement of various climate regulations. President Trump is doing so to put American jobs first, which to him is more important than regulating global temperature changes. In particular, Trump’s executive order will initiate a Federal review of the Clean Power Plan initiative, and potentially loosen regulations. Many traders expect Trump’s policies to favor coal and the oil and gas industry, at the expense of renewable energy sources such as solar and wind.

Separately, this morning, Philip Shen of Roth Capital lowered his target price to $29 per share from $37 due to his belief of short-term earnings headwinds ahead.

As of pre-market trading, traders have, for the most part, brushed off the news. First Solar, Inc. (NASDAQ:FSLR) shares are up around 1% on light volume. Judging by the pre-market’s price action, it seems that investors have for largely priced in the effect of today’s news.

What Does The Smart Money Sentiment Say?

At Insider Monkey, we’ve developed an investment strategy that has delivered market-beating returns over the past 12 months. Our strategy identifies the 100 best-performing funds of the previous quarter from among the collection of 700+ successful funds that we track in our database, which we accomplish using our returns methodology. We then study the portfolios of those 100 funds using the latest 13F data to uncover the 30 most popular mid-cap stocks (market caps of between $1 billion and $10 billion) among them to hold until the next filing period. This strategy delivered 39.7% gains over the past 12 months and outperformed the 24.1% gain enjoyed by the S&P 500 ETFs. Our enhanced small-cap hedge fund strategy returned more than 45% over the last 12 months and outperformed SPY by more than 30 percentage points over the last 4.5 years (see details here).

In terms of smart money sentiment, elite institutions were less bullish on the solar producer in the fourth quarter than they were in the third quarter. Of the 742 elite funds we track, 21 funds owned $168.09 million of First Solar, Inc. (NASDAQ:FSLR) and accounted for 5.00% of the float on December 31, versus 23 funds and $245.59 million respectively on September 30. While John Overdeck And David Siegel‘s Two Sigma Advisors increased their stake by 25,844% to 1.4 million shares, Ken Griffin’s Citadel Investment Group went the other way and trimmed its holdings by 19%  to 932,264 shares.

The Bottom Line

First Solar, Inc. (NASDAQ:FSLR) shares have languished due to poor sentiment and bad peer earnings results. President Trump’s stance of favoring jobs over the environment could hurt sentiment further given that his policies could trim growth demand for First Solar in the long term. Judging by today’s pre-market price action, a lot of the bad news has been priced in. Solar has been an extremely cyclical sector in the past with long bear markets and major bull rallies, and in that aspect, the sector will likely remain the same despite Trump’s executive order.

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