Is ReneSola Ltd. (NYSE:SOL) a good stock to buy right now? We at Insider Monkey like to examine what billionaires and hedge funds think of a company before spending days of research on it. Given their 2 and 20 payment structure, hedge funds have more incentives and resources than the average investor. The funds have access to expert networks and get tips from industry insiders. They also employ numerous Ivy League graduates and MBAs. Like everyone else, hedge funds perform miserably at times, but their consensus picks have historically outperformed the market after risk adjustments.
ReneSola Ltd. (NYSE:SOL) shares haven't seen a lot of action during the third quarter. Overall, hedge fund sentiment was unchanged. The stock was in 2 hedge funds' portfolios at the end of September. The level and the change in hedge fund popularity aren't the only variables you need to analyze to decipher hedge funds' perspectives. A stock may witness a boost in popularity but it may still be less popular than similarly priced stocks. That's why at the end of this article we will examine companies such as Summit Therapeutics PLC (NASDAQ:SMMT), Kopin Corporation (NASDAQ:KOPN), and Spring Bank Pharmaceuticals, Inc. (NASDAQ:SBPH) to gather more data points. Our calculations also showed that SOL isn't among the 30 most popular stocks among hedge funds (see the video below). Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.
Why do we pay any attention at all to hedge fund sentiment? 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_26073" align="aligncenter" width="450"] Jim Simons of RENAISSANCE TECHNOLOGIES[/caption]
We're going to take a look at the fresh hedge fund action surrounding ReneSola Ltd. (NYSE:SOL).
How have hedgies been trading ReneSola Ltd. (NYSE:SOL)?
Heading into the fourth quarter of 2019, a total of 2 of the hedge funds tracked by Insider Monkey were long this stock, a change of 0% from the second quarter of 2019. By comparison, 2 hedge funds held shares or bullish call options in SOL a year ago. With hedge funds' sentiment swirling, there exists a few notable hedge fund managers who were upping their stakes meaningfully (or already accumulated large positions).
According to Insider Monkey's hedge fund database, Himanshu H. Shah's Shah Capital Management has the most valuable position in ReneSola Ltd. (NYSE:SOL), worth close to $5.7 million, comprising 3.1% of its total 13F portfolio. The second most bullish fund manager is Renaissance Technologies founded by Jim Simons, with a $1.2 million position; less than 0.1%% of its 13F portfolio is allocated to the company.
Earlier we told you that the aggregate hedge fund interest in the stock was unchanged and we view this as a negative development. Even though there weren't any hedge funds dumping their holdings during the third quarter, there weren't any hedge funds initiating brand new positions. This indicates that hedge funds, at the very best, perceive this stock as dead money and they haven't identified any viable catalysts that can attract investor attention.
Let's check out hedge fund activity in other stocks - not necessarily in the same industry as ReneSola Ltd. (NYSE:SOL) but similarly valued. These stocks are Summit Therapeutics PLC (NASDAQ:SMMT), Kopin Corporation (NASDAQ:KOPN), Spring Bank Pharmaceuticals, Inc. (NASDAQ:SBPH), and Motus GI Holdings, Inc. (NASDAQ:MOTS). This group of stocks' market valuations resemble SOL's market valuation.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position SMMT,3,3596,0 KOPN,7,3232,4 SBPH,8,13851,1 MOTS,10,13588,1 Average,7,8567,1.5 [/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 $9 million. That figure was $7 million in SOL's case. Motus GI Holdings, Inc. (NASDAQ:MOTS) is the most popular stock in this table. On the other hand Summit Therapeutics PLC (NASDAQ:SMMT) is the least popular one with only 3 bullish hedge fund positions. Compared to these stocks ReneSola Ltd. (NYSE:SOL) is even less popular than SMMT. Our calculations showed that top 20 most popular stocks among hedge funds returned 34.7% in 2019 through November 22nd and outperformed the S&P 500 ETF (SPY) by 8.5 percentage points. A small number of hedge funds were also right about betting on SOL, though not to the same extent, as the stock returned 7.4% during the fourth quarter (through 11/22) and outperformed the market as well.
Disclosure: None. This article was originally published at Insider Monkey.