Before we spend countless hours researching a company, we like to analyze what insiders, hedge funds and billionaire investors think of the stock first. This is a necessary first step in our investment process because our research has shown that the elite investors' consensus returns have been exceptional. In the following paragraphs, we find out what the billionaire investors and hedge funds think of Solaredge Technologies Inc (NASDAQ:SEDG).
Solaredge Technologies Inc (NASDAQ:SEDG) has experienced a decrease in activity from the world's largest hedge funds in recent months. Our calculations also showed that SEDG isn't among the 30 most popular stocks among hedge funds (click for Q1 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.
At the moment there are a large number of metrics stock traders have at their disposal to value their stock investments. Some of the most underrated metrics are hedge fund and insider trading signals. We have shown that, historically, those who follow the best picks of the best hedge fund managers can outclass the S&P 500 by a superb margin (see the details here).
[caption id="attachment_728376" align="aligncenter" width="385"] Jonathan Barrett of Luminus Management[/caption]
We leave no stone unturned when looking for the next great investment idea. For example, we believe electric vehicles and energy storage are set to become giant markets, and we want to take advantage of the declining lithium prices amid the COVID-19 pandemic. So we are checking out investment opportunities like these. We interview hedge fund managers and ask them about their best ideas. If you want to find out the best healthcare stock to buy right now, you can watch our latest hedge fund manager interview here. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. Our best call in 2020 was shorting the market when the S&P 500 was trading at 3150 after realizing the coronavirus pandemic’s significance before most investors. Now let's take a look at the recent hedge fund action encompassing Solaredge Technologies Inc (NASDAQ:SEDG).
How have hedgies been trading Solaredge Technologies Inc (NASDAQ:SEDG)?
At Q1's end, a total of 27 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -4% from the previous quarter. By comparison, 22 hedge funds held shares or bullish call options in SEDG a year ago. So, let's see 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 Solaredge Technologies Inc (NASDAQ:SEDG), with a stake worth $54.8 million reported as of the end of September. Trailing D E Shaw was Polar Capital, which amassed a stake valued at $51.7 million. Impax Asset Management, AQR Capital Management, 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 Tenzing Global Investors allocated the biggest weight to Solaredge Technologies Inc (NASDAQ:SEDG), around 2.03% of its 13F portfolio. Trellus Management Company is also relatively very bullish on the stock, designating 1.1 percent of its 13F equity portfolio to SEDG.
Due to the fact that Solaredge Technologies Inc (NASDAQ:SEDG) has witnessed a decline in interest from the aggregate hedge fund industry, logic holds that there was a specific group of fund managers that decided to sell off their entire stakes heading into Q4. At the top of the heap, Richard Mashaal's Rima Senvest Management cut the biggest position of all the hedgies tracked by Insider Monkey, worth close to $79.2 million in stock, and Roy Vermus and Shlomi Bracha's Noked Capital was right behind this move, as the fund dropped about $41.3 million worth. These bearish behaviors are important to note, as aggregate hedge fund interest fell by 1 funds heading into Q4.
Let's check out hedge fund activity in other stocks - not necessarily in the same industry as Solaredge Technologies Inc (NASDAQ:SEDG) but similarly valued. We will take a look at LogMeIn Inc (NASDAQ:LOGM), Anaplan, Inc. (NYSE:PLAN), Xerox Holdings Corporation (NYSE:XRX), and Autoliv Inc. (NYSE:ALV). All of these stocks' market caps are similar to SEDG's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position LOGM,28,759486,-3 PLAN,51,1608189,-6 XRX,41,872768,2 ALV,15,366576,-6 Average,33.75,901755,-3.25 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 33.75 hedge funds with bullish positions and the average amount invested in these stocks was $902 million. That figure was $264 million in SEDG's case. Anaplan, Inc. (NYSE:PLAN) is the most popular stock in this table. On the other hand Autoliv Inc. (NYSE:ALV) is the least popular one with only 15 bullish hedge fund positions. Solaredge Technologies Inc (NASDAQ:SEDG) is not the least popular stock in this group but hedge fund interest is still below average. Our calculations showed that top 10 most popular stocks among hedge funds returned 41.4% in 2019 and outperformed the S&P 500 ETF (SPY) by 10.1 percentage points. These stocks gained 8.3% in 2020 through the end of May and still beat the market by 13.2 percentage points. A small number of hedge funds were also right about betting on SEDG as the stock returned 73.3% during the second quarter and outperformed the market by an even larger margin.
Disclosure: None. This article was originally published at Insider Monkey.