Is Clean Energy Fuels Corp (NASDAQ:CLNE) a good place to invest some of your money right now? We can gain invaluable insight to help us answer that question by studying the investment trends of top investors, who employ world-class Ivy League graduates, who are given immense resources and industry contacts to put their financial expertise to work. The top picks of these firms have historically outperformed the market when we account for known risk factors, making them very valuable investment ideas.
Is Clean Energy Fuels Corp (NASDAQ:CLNE) the right pick for your portfolio? The best stock pickers are in a bearish mood. The number of long hedge fund bets dropped by 3 in recent months. Our calculations also showed that CLNE isn't among the 30 most popular stocks among hedge funds (see the video below). CLNE was in 8 hedge funds' portfolios at the end of June. There were 11 hedge funds in our database with CLNE positions at the end of the previous quarter. Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.
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. 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 market by 40 percentage points since May 2014 through May 30, 2019 (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.
Unlike former hedge manager, Dr. Steve Sjuggerud, who is convinced Dow will soar past 40000, our long-short investment strategy doesn't rely on bull markets to deliver double digit returns. We only rely on hedge fund buy/sell signals. We're going to take a glance at the latest hedge fund action surrounding Clean Energy Fuels Corp (NASDAQ:CLNE).
What have hedge funds been doing with Clean Energy Fuels Corp (NASDAQ:CLNE)?
At the end of the second quarter, a total of 8 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -27% from one quarter earlier. Below, you can check out the change in hedge fund sentiment towards CLNE over the last 16 quarters. With hedgies' capital changing hands, there exists a few noteworthy hedge fund managers who were adding to their stakes substantially (or already accumulated large positions).
More specifically, Renaissance Technologies was the largest shareholder of Clean Energy Fuels Corp (NASDAQ:CLNE), with a stake worth $26.1 million reported as of the end of March. Trailing Renaissance Technologies was D E Shaw, which amassed a stake valued at $0.5 million. AQR Capital Management, Ardsley Partners, and Trellus Management Company were also very fond of the stock, giving the stock large weights in their portfolios.
Judging by the fact that Clean Energy Fuels Corp (NASDAQ:CLNE) has witnessed bearish sentiment from the smart money, we can see that there exists a select few fund managers that decided to sell off their positions entirely heading into Q3. At the top of the heap, Ken Griffin's Citadel Investment Group cut the largest investment of the 750 funds tracked by Insider Monkey, totaling an estimated $0.8 million in stock, and Michael Platt and William Reeves's BlueCrest Capital Mgmt. was right behind this move, as the fund dumped about $0.2 million worth. These moves are intriguing to say the least, as aggregate hedge fund interest was cut by 3 funds heading into Q3.
Let's now review hedge fund activity in other stocks - not necessarily in the same industry as Clean Energy Fuels Corp (NASDAQ:CLNE) but similarly valued. These stocks are Progenics Pharmaceuticals, Inc. (NASDAQ:PGNX), Resources Connection, Inc. (NASDAQ:RECN), Blue Bird Corporation (NASDAQ:BLBD), and Simulations Plus, Inc. (NASDAQ:SLP). This group of stocks' market values are closest to CLNE's market value.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position PGNX,13,88033,-1 RECN,13,39849,-1 BLBD,5,65736,-1 SLP,9,32263,3 Average,10,56470,0 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 10 hedge funds with bullish positions and the average amount invested in these stocks was $56 million. That figure was $28 million in CLNE's case. Progenics Pharmaceuticals, Inc. (NASDAQ:PGNX) is the most popular stock in this table. On the other hand Blue Bird Corporation (NASDAQ:BLBD) is the least popular one with only 5 bullish hedge fund positions. Clean Energy Fuels Corp (NASDAQ:CLNE) is not the least popular stock in this group but hedge fund interest is still below average. This is a slightly negative signal and we'd rather spend our time researching stocks that hedge funds are piling on. Our calculations showed that top 20 most popular stocks among hedge funds returned 24.4% in 2019 through September 30th and outperformed the S&P 500 ETF (SPY) by 4 percentage points. Unfortunately CLNE wasn't nearly as popular as these 20 stocks (hedge fund sentiment was quite bearish); CLNE investors were disappointed as the stock returned -22.5% during the third quarter and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 20 most popular stocks among hedge funds as many of these stocks already outperformed the market so far in 2019.
Disclosure: None. This article was originally published at Insider Monkey.