With the first-quarter round of 13F filings behind us it is time to take a look at the stocks in which some of the best money managers in the world preferred to invest or sell heading into the second quarter. One of these stocks was SunPower Corporation (NASDAQ:SPWR).
SunPower Corporation (NASDAQ:SPWR) investors should be aware of an increase in activity from the world's largest hedge funds of late. SPWR was in 14 hedge funds' portfolios at the end of September. There were 10 hedge funds in our database with SPWR positions at the end of the previous quarter. Our calculations also showed that SPWR isn't among the 30 most popular stocks among hedge funds (click for Q3 rankings and see the video below for Q2 rankings). Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.
In the financial world there are a large number of tools investors have at their disposal to grade stocks. A pair of the most under-the-radar tools are hedge fund and insider trading indicators. We have shown that, historically, those who follow the top picks of the best fund managers can outperform the broader indices by a solid amount. Insider Monkey's flagship best performing hedge funds strategy returned 91% since May 2014 and outperformed the Russell 2000 ETFs by nearly 40 percentage points. Our short strategy outperformed the S&P 500 short ETFs by 20 percentage points annually (see the details here). That's why we believe hedge fund sentiment is a useful indicator that investors should pay attention to.
[caption id="attachment_27676" align="aligncenter" width="355"] Israel Englander of Millennium Management[/caption]
We leave no stone unturned when looking for the next great investment idea. For example Europe is set to become the world's largest cannabis market, so we check out this European marijuana stock pitch. One of the most bullish analysts in America just put his money where his mouth is. He says, "I'm investing more today than I did back in early 2009." So we check out his pitch. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. We also rely on the best performing hedge funds' buy/sell signals. Let's review the recent hedge fund action regarding SunPower Corporation (NASDAQ:SPWR).
How have hedgies been trading SunPower Corporation (NASDAQ:SPWR)?
At the end of the third quarter, a total of 14 of the hedge funds tracked by Insider Monkey were long this stock, a change of 40% from the second quarter of 2019. On the other hand, there were a total of 10 hedge funds with a bullish position in SPWR a year ago. So, let's check out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
More specifically, D E Shaw was the largest shareholder of SunPower Corporation (NASDAQ:SPWR), with a stake worth $32.1 million reported as of the end of September. Trailing D E Shaw was Impax Asset Management, which amassed a stake valued at $26.7 million. Columbus Circle Investors, Citadel Investment Group, 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 Signition LP allocated the biggest weight to SunPower Corporation (NASDAQ:SPWR), around 0.77% of its 13F portfolio. Columbus Circle Investors is also relatively very bullish on the stock, setting aside 0.6 percent of its 13F equity portfolio to SPWR.
With a general bullishness amongst the heavyweights, key money managers were breaking ground themselves. Columbus Circle Investors, managed by Principal Global Investors, assembled the biggest position in SunPower Corporation (NASDAQ:SPWR). Columbus Circle Investors had $16.3 million invested in the company at the end of the quarter. Jonathan Barrett and Paul Segal's Luminus Management also initiated a $5.5 million position during the quarter. The other funds with new positions in the stock are Phil Frohlich's Prescott Group Capital Management, Brandon Haley's Holocene Advisors, and Donald Sussman's Paloma Partners.
Let's now review hedge fund activity in other stocks similar to SunPower Corporation (NASDAQ:SPWR). These stocks are Badger Meter, Inc. (NYSE:BMI), Jagged Peak Energy Inc. (NYSE:JAG), Redfin Corporation (NASDAQ:RDFN), and Scorpio Tankers Inc. (NYSE:STNG). This group of stocks' market valuations resemble SPWR's market valuation.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position BMI,17,142140,5 JAG,14,162814,1 RDFN,15,213466,5 STNG,24,121555,1 Average,17.5,159994,3 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 17.5 hedge funds with bullish positions and the average amount invested in these stocks was $160 million. That figure was $106 million in SPWR's case. Scorpio Tankers Inc. (NYSE:STNG) is the most popular stock in this table. On the other hand Jagged Peak Energy Inc. (NYSE:JAG) is the least popular one with only 14 bullish hedge fund positions. Compared to these stocks SunPower Corporation (NASDAQ:SPWR) is even less popular than JAG. Hedge funds dodged a bullet by taking a bearish stance towards SPWR. Our calculations showed that the top 20 most popular hedge fund stocks returned 37.4% in 2019 through the end of November and outperformed the S&P 500 ETF (SPY) by 9.9 percentage points. Unfortunately SPWR wasn't nearly as popular as these 20 stocks (hedge fund sentiment was very bearish); SPWR investors were disappointed as the stock returned -31.7% during the fourth quarter (through the end of November) 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 70 percent of these stocks already outperformed the market so far in Q4.
Disclosure: None. This article was originally published at Insider Monkey.