Where Do Hedge Funds Stand On ReneSola Ltd. (SOL)?

We at Insider Monkey have gone over 817 13F filings that hedge funds and prominent investors are required to file by the SEC The 13F filings show the funds’ and investors’ portfolio positions as of September 30th. In this article, we look at what those funds think of ReneSola Ltd. (NYSE:SOL) based on that data.

Is ReneSola Ltd. (NYSE:SOL) a buy, sell, or hold? The smart money was getting more optimistic. The number of long hedge fund bets moved up by 2 lately. ReneSola Ltd. (NYSE:SOL) was in 5 hedge funds’ portfolios at the end of the third quarter of 2020. The all time high for this statistics is 5. This means the bullish number of hedge fund positions in this stock currently sits at its all time high. Our calculations also showed that SOL isn’t among the 30 most popular stocks among hedge funds (click for Q3 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.

So, why do we pay attention to hedge fund sentiment before making any investment decisions? Our research has shown that hedge funds’ small-cap stock picks managed to beat the market by double digits annually between 1999 and 2016, but the margin of outperformance has been declining in recent years. Nevertheless, we were still able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by more than 66 percentage points since March 2017 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that underperformed the market by 10 percentage points annually between 2006 and 2017. Interestingly the margin of underperformance of these stocks has been increasing in recent years. Investors who are long the market and short these stocks would have returned more than 27% annually between 2015 and 2017. We have been tracking and sharing the list of these stocks since February 2017 in our quarterly newsletter. Even if you aren’t comfortable with shorting stocks, you should at least avoid initiating long positions in stocks that are in our short portfolio.

Ian Wace Marshall Wace

Ian Wace of Marshall Wace

At Insider Monkey we scour multiple sources to uncover the next great investment idea. For example, Federal Reserve has been creating trillions of dollars electronically to keep the interest rates near zero. We believe this will lead to inflation and boost real estate prices. So, we recommended this real estate stock to our monthly premium newsletter subscribers. We go through lists like the 15 best blue chip stocks to pick the best large-cap stocks to buy. 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 website. Now we’re going to analyze the recent hedge fund action regarding ReneSola Ltd. (NYSE:SOL).

What does smart money think about ReneSola Ltd. (NYSE:SOL)?

At third quarter’s end, a total of 5 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 67% from the previous quarter. The graph below displays the number of hedge funds with bullish position in SOL over the last 21 quarters. With hedgies’ positions undergoing their usual ebb and flow, there exists a few noteworthy hedge fund managers who were boosting their stakes significantly (or already accumulated large positions).

More specifically, Shah Capital Management was the largest shareholder of ReneSola Ltd. (NYSE:SOL), with a stake worth $29.1 million reported as of the end of September. Trailing Shah Capital Management was Renaissance Technologies, which amassed a stake valued at $1.8 million. Millennium Management, Marshall Wace LLP, and Citadel Investment Group 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 Shah Capital Management allocated the biggest weight to ReneSola Ltd. (NYSE:SOL), around 15.29% of its 13F portfolio. Renaissance Technologies is also relatively very bullish on the stock, earmarking 0.0018 percent of its 13F equity portfolio to SOL.

With a general bullishness amongst the heavyweights, key hedge funds were breaking ground themselves. Millennium Management, managed by Israel Englander, initiated the largest position in ReneSola Ltd. (NYSE:SOL). Millennium Management had $0.3 million invested in the company at the end of the quarter. Paul Marshall and Ian Wace’s Marshall Wace LLP also initiated a $0.2 million position during the quarter.

Let’s also examine hedge fund activity in other stocks – not necessarily in the same industry as ReneSola Ltd. (NYSE:SOL) but similarly valued. We will take a look at Mackinac Financial Corporation (NASDAQ:MFNC), Information Services Group, Inc. (NASDAQ:III), MainStreet Bancshares, Inc. (NASDAQ:MNSB), Aesthetic Medical International Holdings Group Ltd. (NASDAQ:AIH), Enzo Biochem, Inc. (NYSE:ENZ), Centrus Energy Corp. (NYSE:LEU), and Velocity Financial, Inc. (NYSE:VEL). All of these stocks’ market caps resemble SOL’s market cap.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
MFNC 6 7619 2
III 5 18567 0
MNSB 2 7282 -1
AIH 1 181 0
ENZ 10 26753 2
LEU 3 3398 1
VEL 7 19829 -1
Average 4.9 11947 0.4

View table here if you experience formatting issues.

As you can see these stocks had an average of 4.9 hedge funds with bullish positions and the average amount invested in these stocks was $12 million. That figure was $31 million in SOL’s case. Enzo Biochem, Inc. (NYSE:ENZ) is the most popular stock in this table. On the other hand Aesthetic Medical International Holdings Group Ltd. (NASDAQ:AIH) is the least popular one with only 1 bullish hedge fund positions. ReneSola Ltd. (NYSE:SOL) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for SOL is 59.2. 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. Our calculations showed that top 20 most popular stocks among hedge funds returned 41.3% in 2019 and outperformed the S&P 500 ETF (SPY) by 10 percentage points. These stocks gained 30.7% in 2020 through November 27th and still beat the market by 16.1 percentage points. Hedge funds were also right about betting on SOL as the stock returned 261.4% since the end of Q3 (through 11/27) 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.