"Since 2006, value stocks (IVE vs IVW) have underperformed 11 of the 13 calendar years and when they beat growth, it wasn't by much. Cumulatively, through this week, it has been a 122% differential (up 52% for value vs up 174% for growth). This appears to be the longest and most severe drought for value investors since data collection began. It will go our way eventually as there are too many people paying far too much for today's darlings, both public and private. Further, the ten-year yield of 2.5% (pre-tax) isn't attractive nor is real estate. We believe the value part of the global equity market is the only place to earn solid risk adjusted returns and we believe those returns will be higher than normal," said Vilas Fund in its Q1 investor letter. We aren't sure whether value stocks outperform growth, but we follow hedge fund investor letters to understand where the markets and stocks might be going. This article will lay out and discuss the hedge fund and institutional investor sentiment towards Bloom Energy Corporation (NYSE:BE).
Bloom Energy Corporation (NYSE:BE) has experienced an increase in hedge fund interest of late. Our calculations also showed that BE 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.
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' large-cap stock picks indeed failed to beat the market between 1999 and 2016. However, we were able to identify in advance a select group of hedge fund holdings that outperformed the Russell 2000 ETFs by 40 percentage points since May 2014 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that'll significantly underperform the market. We have been tracking and sharing the list of these stocks since February 2017 and they lost 27.8% through November 21, 2019. That's why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
[caption id="attachment_27480" align="alignnone" width="600"] 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. We're going to take a glance at the new hedge fund action regarding Bloom Energy Corporation (NYSE:BE).
What does smart money think about Bloom Energy Corporation (NYSE:BE)?
At Q3's end, a total of 14 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 27% from the second quarter of 2019. Below, you can check out the change in hedge fund sentiment towards BE over the last 17 quarters. So, let's check 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, Millennium Management, managed by Israel Englander, holds the most valuable position in Bloom Energy Corporation (NYSE:BE). Millennium Management has a $7.5 million position in the stock, comprising less than 0.1%% of its 13F portfolio. Sitting at the No. 2 spot is Royce & Associates, led by Chuck Royce, holding a $3.4 million position; less than 0.1%% of its 13F portfolio is allocated to the company. Other professional money managers that hold long positions comprise Ken Griffin's Citadel Investment Group, Thomas E. Claugus's GMT Capital and Renaissance Technologies. In terms of the portfolio weights assigned to each position Manatuck Hill Partners allocated the biggest weight to Bloom Energy Corporation (NYSE:BE), around 0.14% of its 13F portfolio. GMT Capital is also relatively very bullish on the stock, setting aside 0.09 percent of its 13F equity portfolio to BE.
With a general bullishness amongst the heavyweights, some big names were leading the bulls' herd. GMT Capital, managed by Thomas E. Claugus, assembled the largest position in Bloom Energy Corporation (NYSE:BE). GMT Capital had $2.4 million invested in the company at the end of the quarter. Renaissance Technologies also initiated a $1.6 million position during the quarter. The other funds with brand new BE positions are John Orrico's Water Island Capital, Peter Muller's PDT Partners, and Minhua Zhang's Weld Capital Management.
Let's also examine hedge fund activity in other stocks similar to Bloom Energy Corporation (NYSE:BE). These stocks are BioDelivery Sciences International, Inc. (NASDAQ:BDSI), Envirostar Inc (NYSEAMEX:EVI), Overstock.com, Inc. (NASDAQ:OSTK), and VSE Corporation (NASDAQ:VSEC). All of these stocks' market caps are closest to BE's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position BDSI,18,109364,2 EVI,2,34322,1 OSTK,4,3762,-5 VSEC,4,1393,0 Average,7,37210,-0.5 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 7 hedge funds with bullish positions and the average amount invested in these stocks was $37 million. That figure was $21 million in BE's case. BioDelivery Sciences International, Inc. (NASDAQ:BDSI) is the most popular stock in this table. On the other hand Envirostar Inc (NYSEAMEX:EVI) is the least popular one with only 2 bullish hedge fund positions. Bloom Energy Corporation (NYSE:BE) is not the most popular stock in this group but hedge fund interest is still above average. Our calculations showed that top 20 most popular stocks among hedge funds returned 37.4% in 2019 through the end of November and outperformed the S&P 500 ETF (SPY) by 9.9 percentage points. Hedge funds were also right about betting on BE as the stock returned 100.6% during the fourth quarter (through the end of November) and outperformed the market. Hedge funds were rewarded for their relative bullishness.
Disclosure: None. This article was originally published at Insider Monkey.