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Hedge Funds Are Coming Back To First Solar, Inc. (FSLR)

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We at Insider Monkey have gone over 873 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 June 30th. In this article, we look at what those funds think of First Solar, Inc. (NASDAQ:FSLR) based on that data.

Is First Solar, Inc. (NASDAQ:FSLR) going to take off soon? Hedge funds were in an optimistic mood. The number of long hedge fund positions moved up by 7 lately. First Solar, Inc. (NASDAQ:FSLR) was in 31 hedge funds' portfolios at the end of June. The all time high for this statistic is 40. Our calculations also showed that FSLR isn't among the 30 most popular stocks among hedge funds (click for Q2 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. 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 79 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.

Philip Hempleman Ardsley Partners
Philip Hempleman Ardsley Partners

Philip Hempleman of Ardsley Partners

At Insider Monkey, we scour multiple sources to uncover 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 EV 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. Now we're going to check out the key hedge fund action regarding First Solar, Inc. (NASDAQ:FSLR).

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

At the end of the second quarter, a total of 31 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 29% from one quarter earlier. Below, you can check out the change in hedge fund sentiment towards FSLR over the last 24 quarters. So, let's find out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

Of the funds tracked by Insider Monkey, Ken Griffin's Citadel Investment Group has the largest call position in First Solar, Inc. (NASDAQ:FSLR), worth close to $107.2 million, accounting for less than 0.1%% of its total 13F portfolio. The second most bullish fund manager is Douglas Harold Hart Polunin of Polunin Capital, with a $77.6 million position; the fund has 24% of its 13F portfolio invested in the stock. Some other members of the smart money with similar optimism include Mike Masters's Masters Capital Management, Jos Shaver's Electron Capital Partners and Michael Cowley's Sandbar Asset Management. In terms of the portfolio weights assigned to each position Polunin Capital allocated the biggest weight to First Solar, Inc. (NASDAQ:FSLR), around 23.96% of its 13F portfolio. Sandbar Asset Management is also relatively very bullish on the stock, dishing out 3.35 percent of its 13F equity portfolio to FSLR.

Consequently, key money managers have been driving this bullishness. Masters Capital Management, managed by Mike Masters, assembled the most valuable call position in First Solar, Inc. (NASDAQ:FSLR). Masters Capital Management had $45.3 million invested in the company at the end of the quarter. Jos Shaver's Electron Capital Partners also made a $40.8 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, Steve Cohen's Point72 Asset Management, and Philip Hempleman's Ardsley Partners.

Let's check out hedge fund activity in other stocks - not necessarily in the same industry as First Solar, Inc. (NASDAQ:FSLR) but similarly valued. These stocks are Vertiv Holdings Co (NYSE:VRT), Reliance Steel & Aluminum Co. (NYSE:RS), NiSource Inc. (NYSE:NI), Western Alliance Bancorporation (NYSE:WAL), Upstart Holdings, Inc. (NASDAQ:UPST), Americold Realty Trust (NYSE:COLD), and First Horizon Corporation (NYSE:FHN). All of these stocks' market caps resemble FSLR's market cap.

[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position VRT,36,904262,-3 RS,27,273896,9 NI,36,559849,8 WAL,28,188070,5 UPST,21,2135453,8 COLD,16,530325,0 FHN,27,151649,0 Average,27.3,677643,3.9 [/table]

View table here if you experience formatting issues.

As you can see these stocks had an average of 27.3 hedge funds with bullish positions and the average amount invested in these stocks was $678 million. That figure was $317 million in FSLR's case. Vertiv Holdings Co (NYSE:VRT) is the most popular stock in this table. On the other hand Americold Realty Trust (NYSE:COLD) is the least popular one with only 16 bullish hedge fund positions. First Solar, Inc. (NASDAQ:FSLR) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for FSLR is 70.8. 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 5 most popular stocks among hedge funds returned 95.8% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 40 percentage points. These stocks gained 24.9% in 2021 through October 15th and still beat the market by 4.5 percentage points. Hedge funds were also right about betting on FSLR as the stock returned 16.1% since the end of Q2 (through 10/15) 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.