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Although the masses and most of the financial media blame hedge funds for their exorbitant fee structure and disappointing performance, these investors have proved to have great stock picking abilities over the years (that's why their assets under management continue to swell). We believe hedge fund sentiment should serve as a crucial tool of an individual investor’s stock selection process, as it may offer great insights of how the brightest minds of the finance industry feel about specific stocks. After all, these people have access to smartest analysts and expensive data/information sources that individual investors can't match. So should one consider investing in Sunrun Inc (NASDAQ:RUN)? The smart money sentiment can provide an answer to this question.
Is Sunrun (RUN) stock a buy or sell? Hedge funds were in an optimistic mood. The number of bullish hedge fund positions improved by 19 in recent months. Sunrun Inc (NASDAQ:RUN) was in 48 hedge funds' portfolios at the end of December. The all time high for this statistic is 29. This means the bullish number of hedge fund positions in this stock currently sits at its all time high. Our calculations also showed that RUN isn't among the 30 most popular stocks among hedge funds (click for Q4 rankings).
In the 21st century investor’s toolkit there are a large number of gauges stock market investors use to size up stocks. Some of the most useful gauges are hedge fund and insider trading moves. Our researchers have shown that, historically, those who follow the top picks of the best hedge fund managers can trounce the S&P 500 by a superb amount (see the details here).
Glen Kacher of Light Street Capital
At Insider Monkey we leave no stone unturned when looking for the next great investment idea. Recently Oregon became the first state to legalize psychedelic mushrooms which are shown to have promising results in treating depression, addiction, and PTSD in early stage academic studies. So, we are checking out this psychedelic drug stock idea right now. We go through lists like the 10 best biotech stocks to invest in to pick the next stock 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 (or at the end of this article).Keeping this in mind we're going to go over the fresh hedge fund action encompassing Sunrun Inc (NASDAQ:RUN).
Do Hedge Funds Think RUN Is A Good Stock To Buy Now?
At Q4's end, a total of 48 of the hedge funds tracked by Insider Monkey were long this stock, a change of 66% from the previous quarter. Below, you can check out the change in hedge fund sentiment towards RUN over the last 22 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.
The largest stake in Sunrun Inc (NASDAQ:RUN) was held by Coatue Management, which reported holding $1296.9 million worth of stock at the end of December. It was followed by Tiger Global Management LLC with a $560.1 million position. Other investors bullish on the company included Two Sigma Advisors, Point State Capital, and Light Street Capital. In terms of the portfolio weights assigned to each position Quaero Capital allocated the biggest weight to Sunrun Inc (NASDAQ:RUN), around 5.88% of its 13F portfolio. Ecofin Ltd is also relatively very bullish on the stock, setting aside 5.49 percent of its 13F equity portfolio to RUN.
Consequently, key money managers have been driving this bullishness. Point State Capital, managed by Zach Schreiber, established the biggest position in Sunrun Inc (NASDAQ:RUN). Point State Capital had $162.3 million invested in the company at the end of the quarter. Glen Kacher's Light Street Capital also made a $134.8 million investment in the stock during the quarter. The other funds with new positions in the stock are Louis Bacon's Moore Global Investments, Frank Fu's CaaS Capital, and Josh Resnick's Jericho Capital Asset Management.
Let's now review hedge fund activity in other stocks similar to Sunrun Inc (NASDAQ:RUN). We will take a look at iQIYI, Inc. (NASDAQ:IQ), VICI Properties Inc. (NYSE:VICI), Principal Financial Group Inc (NASDAQ:PFG), Eastman Chemical Company (NYSE:EMN), Discovery Inc. (NASDAQ:DISCA), Crown Holdings, Inc. (NYSE:CCK), and Brookfield Property Partners LP (NASDAQ:BPY). This group of stocks' market valuations are similar to RUN's market valuation.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position IQ,30,1048707,12 VICI,38,970234,-2 PFG,26,117451,1 EMN,31,133838,4 DISCA,28,226741,-1 CCK,63,2030129,16 BPY,9,26137,1 Average,32.1,650462,4.4 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 32.1 hedge funds with bullish positions and the average amount invested in these stocks was $650 million. That figure was $3008 million in RUN's case. Crown Holdings, Inc. (NYSE:CCK) is the most popular stock in this table. On the other hand Brookfield Property Partners LP (NASDAQ:BPY) is the least popular one with only 9 bullish hedge fund positions. Sunrun Inc (NASDAQ:RUN) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for RUN is 76.1. 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. This is a slightly positive signal but we'd rather spend our time researching stocks that hedge funds are piling on. Our calculations showed that top 30 most popular stocks among hedge funds returned 81.2% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 26 percentage points. These stocks gained 5.3% in 2021 through March 19th and beat the market again by 0.8 percentage points. Unfortunately RUN wasn't nearly as popular as these 30 stocks and hedge funds that were betting on RUN were disappointed as the stock returned -19.9% since the end of December (through 3/19) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 30 most popular stocks among hedge funds as many of these stocks already outperformed the market since 2019.
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Disclosure: None. This article was originally published at Insider Monkey.