Did Hedge Funds Catch A Break With First Solar, Inc. (FSLR)?

The latest 13F reporting period has come and gone, and Insider Monkey have plowed through 867 13F filings that hedge funds and well-known value investors are required to file by the SEC. The 13F filings show the funds’ and investors’ portfolio positions as of September 30th, when the S&P 500 Index was trading around the 4300 level. Since then investors decided to bet on the economic recovery and a stock market rebound even though we experienced a temporary correction in January. In this article you are going to find out whether hedge funds thought First Solar, Inc. (NASDAQ:FSLR) was a good investment heading into the fourth quarter and how the stock traded in comparison to the top hedge fund picks.

Hedge fund interest in First Solar, Inc. (NASDAQ:FSLR) shares was flat at the end of last quarter. This is usually a negative indicator. Our calculations also showed that FSLR isn’t among the 30 most popular stocks among hedge funds (click for Q3 rankings). At the end of this article we will also compare FSLR to other stocks including Brookfield Renewable Partners L.P. (NYSE:BEP), Magellan Midstream Partners, L.P. (NYSE:MMP), and Service Corporation International (NYSE:SCI) to get a better sense of its popularity.

At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, lithium prices have more than doubled over the past year, so we go through lists like the 10 best EV stocks to pick the next Tesla 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. Now we’re going to view the new hedge fund action surrounding First Solar, Inc. (NASDAQ:FSLR).

Michael Gelband of ExodusPoint Capital

Do Hedge Funds Think FSLR Is A Good Stock To Buy Now?

At third quarter’s end, a total of 31 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 0% from the second quarter of 2021. Below, you can check out the change in hedge fund sentiment towards FSLR over the last 25 quarters. With hedge funds’ positions undergoing their usual ebb and flow, there exists an “upper tier” of noteworthy hedge fund managers who were increasing their stakes considerably (or already accumulated large positions).

The largest stake in First Solar, Inc. (NASDAQ:FSLR) was held by Citadel Investment Group, which reported holding $120.3 million worth of stock at the end of September. It was followed by Sandbar Asset Management with a $34.9 million position. Other investors bullish on the company included Millennium Management, Lansdowne Partners, and Citadel Investment Group. In terms of the portfolio weights assigned to each position Sandbar Asset Management allocated the biggest weight to First Solar, Inc. (NASDAQ:FSLR), around 3.79% of its 13F portfolio. Luminus Management is also relatively very bullish on the stock, dishing out 3.5 percent of its 13F equity portfolio to FSLR.

Seeing as First Solar, Inc. (NASDAQ:FSLR) has witnessed falling interest from hedge fund managers, it’s easy to see that there lies a certain “tier” of hedge funds that decided to sell off their positions entirely in the third quarter. Interestingly, Douglas Harold Hart Polunin’s Polunin Capital dumped the largest investment of all the hedgies followed by Insider Monkey, valued at an estimated $77.6 million in stock. Jos Shaver’s fund, Electron Capital Partners, also cut its stock, about $40.8 million worth. These bearish behaviors are important to note, as aggregate hedge fund interest stayed the same (this is a bearish signal in our experience).

Let’s now review hedge fund activity in other stocks – not necessarily in the same industry as First Solar, Inc. (NASDAQ:FSLR) but similarly valued. These stocks are Brookfield Renewable Partners L.P. (NYSE:BEP), Magellan Midstream Partners, L.P. (NYSE:MMP), Service Corporation International (NYSE:SCI), On Holding AG (NYSE:ONON), RPM International Inc. (NYSE:RPM), Molson Coors Beverage Company (NYSE:TAP), and Grifols SA (NASDAQ:GRFS). This group of stocks’ market values are similar to FSLR’s market value.

View table here if you experience formatting issues.

As you can see these stocks had an average of 20.7 hedge funds with bullish positions and the average amount invested in these stocks was $282 million. That figure was $267 million in FSLR’s case. On Holding AG (NYSE:ONON) is the most popular stock in this table. On the other hand Magellan Midstream Partners, L.P. (NYSE:MMP) is the least popular one with only 12 bullish hedge fund positions. Compared to these stocks First Solar, Inc. (NASDAQ:FSLR) is more popular among hedge funds. Our overall hedge fund sentiment score for FSLR is 78.3. 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. Our calculations showed that top 5 most popular stocks among hedge funds returned 95.8% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 40 percentage points. These stocks gained 29.6% in 2021 and still beat the market by 3.6 percentage points. Unfortunately, FSLR wasn’t nearly as popular as these 5 stocks and hedge funds that were betting on FSLR were disappointed as the stock returned -17.9% since the end of the third quarter (through 1/31) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 5 most popular stocks among hedge funds as all of these stocks already outperformed the market since 2019.

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Disclosure: None. This article was originally published at Insider Monkey.