Was The Smart Money Right About Piling Into Sunrun Inc (RUN)?

The latest 13F reporting period has come and gone, and Insider Monkey is again at the forefront when it comes to making use of this gold mine of data. Insider Monkey finished processing 887 13F filings submitted by hedge funds and prominent investors. These filings show these funds’ portfolio positions as of December 31st, 2020. What do these smart investors think about Sunrun Inc (NASDAQ:RUN)?

Is Sunrun Inc (NASDAQ:RUN) undervalued? Investors who are in the know were betting on the stock. The number of long hedge fund bets moved up by 19 recently. Sunrun Inc (NASDAQ:RUN) was in 48 hedge funds’ portfolios at the end of December. The all time high for this statistic was previously 29. This means the bullish number of hedge fund positions in this stock currently sits at its all time high. Our calculations also showed that RUN isn’t among the 30 most popular stocks among hedge funds (click for Q4 rankings).

Hedge funds’ reputation as shrewd investors has been tarnished in the last decade as their hedged returns couldn’t keep up with the unhedged returns of the market indices. Hedge funds have more than $3.5 trillion in assets under management, so you can’t expect their entire portfolios to beat the market by large margins. Our research was able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by more than 124 percentage points since March 2017 (see the details here). So you can still find a lot of gems by following hedge funds’ moves today.

Glen Kacher of Light Street Capital

At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, lithium mining is one of the fastest growing industries right now, so we are checking out stock pitches like this emerging lithium stock. We go through lists like the 10 best hydrogen fuel cell stocks to pick the next Tesla that will deliver a 10x return. 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 homepage. Keeping this in mind we’re going to review the recent hedge fund action regarding Sunrun Inc (NASDAQ:RUN).

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

At the end of December, a total of 48 of the hedge funds tracked by Insider Monkey were long this stock, a change of 66% from the third quarter of 2020. On the other hand, there were a total of 23 hedge funds with a bullish position in RUN a year ago. So, let’s see which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

The largest stake in Sunrun Inc (NASDAQ:RUN) was held by Coatue Management, which reported holding $1296.9 million worth of stock at the end of December. It was followed by Tiger Global Management LLC with a $560.1 million position. Other investors bullish on the company included Two Sigma Advisors, Point State Capital, and Light Street Capital. In terms of the portfolio weights assigned to each position Quaero Capital allocated the biggest weight to Sunrun Inc (NASDAQ:RUN), around 5.88% of its 13F portfolio. Ecofin Ltd is also relatively very bullish on the stock, earmarking 5.49 percent of its 13F equity portfolio to RUN.

As industrywide interest jumped, specific money managers were breaking ground themselves. Point State Capital, managed by Zach Schreiber, established the biggest position in Sunrun Inc (NASDAQ:RUN). Point State Capital had $162.3 million invested in the company at the end of the quarter. Glen Kacher’s Light Street Capital also initiated a $134.8 million position during the quarter. The other funds with new positions in the stock are Louis Bacon’s Moore Global Investments, Frank Fu’s CaaS Capital, and Josh Resnick’s Jericho Capital Asset Management.

Let’s check out hedge fund activity in other stocks – not necessarily in the same industry as Sunrun Inc (NASDAQ:RUN) but similarly valued. These stocks are iQIYI, Inc. (NASDAQ:IQ), VICI Properties Inc. (NYSE:VICI), Principal Financial Group Inc (NASDAQ:PFG), Eastman Chemical Company (NYSE:EMN), Discovery Inc. (NASDAQ:DISCA), Crown Holdings, Inc. (NYSE:CCK), and Brookfield Property Partners LP (NASDAQ:BPY). All of these stocks’ market caps match RUN’s market cap.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
IQ 30 1048707 12
VICI 38 970234 -2
PFG 26 117451 1
EMN 31 133838 4
DISCA 28 226741 -1
CCK 63 2030129 16
BPY 9 26137 1
Average 32.1 650462 4.4

View table here if you experience formatting issues.

As you can see these stocks had an average of 32.1 hedge funds with bullish positions and the average amount invested in these stocks was $650 million. That figure was $3008 million in RUN’s case. Crown Holdings, Inc. (NYSE:CCK) is the most popular stock in this table. On the other hand Brookfield Property Partners LP (NASDAQ:BPY) is the least popular one with only 9 bullish hedge fund positions. Sunrun Inc (NASDAQ:RUN) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for RUN is 76.1. 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. This is a slightly positive signal but we’d rather spend our time researching stocks that hedge funds are piling on. Our calculations showed that top 10 most popular stocks among hedge funds returned 90.7% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 35 percentage points. These stocks gained 13.6% in 2021 through April 30th and beat the market again by 1.6 percentage points. Unfortunately RUN wasn’t nearly as popular as these 10 stocks and hedge funds that were betting on RUN were disappointed as the stock returned -29.4% since the end of December (through 4/30) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 10 most popular stocks among hedge funds as many of these stocks already outperformed the market since 2019.

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