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Were Hedge Funds Right About Piling Into Sunrun Inc (RUN)?

The latest 13F reporting period has come and gone, and Insider Monkey have plowed through 821 13F filings that hedge funds and well-known value investors are required to file by the SEC. The 13F filings show the funds’ and investors’ portfolio positions as of March 31st, a week after the market trough. Now, we are almost done with the second quarter. Investors decided to bet on the economic recovery and a stock market rebound. S&P 500 Index returned almost 20% this quarter. In this article you are going to find out whether hedge funds thoughtSunrun Inc (NASDAQ:RUN) was a good investment heading into the second quarter and how the stock traded in comparison to the top hedge fund picks.

Sunrun Inc (NASDAQ:RUN) shareholders have witnessed an increase in hedge fund sentiment lately. RUN was in 24 hedge funds’ portfolios at the end of the first quarter of 2020. There were 23 hedge funds in our database with RUN holdings at the end of the previous quarter. Our calculations also showed that RUN isn’t among the 30 most popular stocks among hedge funds (click for Q1 rankings and see the video for a quick look at the top 5 stocks).

Video: Watch our video about the top 5 most popular hedge fund stocks.

In the eyes of most stock holders, hedge funds are viewed as underperforming, outdated financial vehicles of years past. While there are over 8000 funds in operation today, Our researchers choose to focus on the moguls of this group, around 850 funds. These investment experts handle the lion’s share of all hedge funds’ total capital, and by tracking their top equity investments, Insider Monkey has brought to light numerous investment strategies that have historically exceeded the market. Insider Monkey’s flagship short hedge fund strategy outpaced the S&P 500 short ETFs by around 20 percentage points per annum since its inception in March 2017. Our portfolio of short stocks lost 36% since February 2017 (through May 18th) even though the market was up 30% during the same period. We just shared a list of 8 short targets in our latest quarterly update .

Paul Marshall Marshall Wace

Paul Marshall of Marshall Wace

At Insider Monkey we scour multiple sources to uncover the next great investment idea. For example, on one site we found out that NBA champion Isiah Thomas is now the CEO of this cannabis company. The same site also talks about a snack manufacturer that’s growing at 30% annually. 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. Hedge fund sentiment towards Tesla reached its all time high at the end of 2019 and Tesla shares more than tripled this year. We are trying to identify other EV revolution winners, so if you have any good ideas send us an email. With all of this in mind we’re going to take a look at the recent hedge fund action regarding Sunrun Inc (NASDAQ:RUN).

What does smart money think about Sunrun Inc (NASDAQ:RUN)?

At Q1’s end, a total of 24 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 4% from the previous quarter. Below, you can check out the change in hedge fund sentiment towards RUN over the last 18 quarters. With hedge funds’ positions undergoing their usual ebb and flow, there exists a select group of noteworthy hedge fund managers who were boosting their stakes considerably (or already accumulated large positions).

Is RUN A Good Stock To Buy?

More specifically, Tiger Global Management LLC was the largest shareholder of Sunrun Inc (NASDAQ:RUN), with a stake worth $300.7 million reported as of the end of September. Trailing Tiger Global Management LLC was Arosa Capital Management, which amassed a stake valued at $21 million. Ardsley Partners, Two Sigma Advisors, and Millennium Management were also very fond of the stock, becoming one of the largest hedge fund holders of the company. In terms of the portfolio weights assigned to each position Ardsley Partners allocated the biggest weight to Sunrun Inc (NASDAQ:RUN), around 3.66% of its 13F portfolio. Ecofin Ltd is also relatively very bullish on the stock, designating 3.19 percent of its 13F equity portfolio to RUN.

Consequently, key hedge funds were leading the bulls’ herd. ZWEIG DIMENNA PARTNERS, managed by Joe DiMenna, established the most valuable position in Sunrun Inc (NASDAQ:RUN). ZWEIG DIMENNA PARTNERS had $0.8 million invested in the company at the end of the quarter. Dmitry Balyasny’s Balyasny Asset Management also made a $0.5 million investment in the stock during the quarter. The other funds with new positions in the stock are Paul Marshall and Ian Wace’s Marshall Wace LLP, Jose Fernandez’s Stepstone Group, and Stephen C. Freidheim’s Cyrus Capital Partners.

Let’s go over hedge fund activity in other stocks – not necessarily in the same industry as Sunrun Inc (NASDAQ:RUN) but similarly valued. We will take a look at SciPlay Corporation (NASDAQ:SCPL), 360 Finance, Inc. (NASDAQ:QFIN), WillScot Corporation (NASDAQ:WSC), and Installed Building Products Inc (NYSE:IBP). This group of stocks’ market valuations resemble RUN’s market valuation.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
SCPL 17 80281 2
QFIN 3 10465 -9
WSC 28 187831 0
IBP 21 86225 -3
Average 17.25 91201 -2.5

View table here if you experience formatting issues.

As you can see these stocks had an average of 17.25 hedge funds with bullish positions and the average amount invested in these stocks was $91 million. That figure was $367 million in RUN’s case. WillScot Corporation (NASDAQ:WSC) is the most popular stock in this table. On the other hand 360 Finance, Inc. (NASDAQ:QFIN) is the least popular one with only 3 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 calculations showed that top 10 most popular stocks among hedge funds returned 41.4% in 2019 and outperformed the S&P 500 ETF (SPY) by 10.1 percentage points. These stocks gained 12.3% in 2020 through June 30th but still beat the market by 15.5 percentage points. Hedge funds were also right about betting on RUN as the stock returned 95.2% in Q2 and outperformed the market. Hedge funds were rewarded for their relative bullishness.

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