Technology stocks had a lousy start to 2022. QQQ lost 9% of its value in January. Pandemic winners are getting crushed while energy stocks are surging. Roblox lost 36%, Moderna lost 33%, and Carvana and Shopify lost 30% of their values in January. We aren’t certain about the bubbly technology stocks that trade for ridiculously high multiples of their revenues, but we believe top hedge fund stocks will deliver positive returns for the rest of the year. In this article, we will take a closer look at hedge fund sentiment towards Solaredge Technologies Inc (NASDAQ:SEDG) at the end of the third quarter and determine whether the smart money was really smart about this stock.
Solaredge Technologies Inc (NASDAQ:SEDG) investors should pay attention to a decrease in hedge fund interest lately. Solaredge Technologies Inc (NASDAQ:SEDG) was in 33 hedge funds’ portfolios at the end of September. The all time high for this statistic is 37. There were 37 hedge funds in our database with SEDG holdings at the end of June. Our calculations also showed that SEDG isn’t among the 30 most popular stocks among hedge funds (click for Q3 rankings).
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. Keeping this in mind we’re going to review the new hedge fund action encompassing Solaredge Technologies Inc (NASDAQ:SEDG).
Israel Englander of Millennium Management
Do Hedge Funds Think SEDG Is A Good Stock To Buy Now?
At third quarter’s end, a total of 33 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -11% from the previous quarter. The graph below displays the number of hedge funds with bullish position in SEDG over the last 25 quarters. So, let’s review which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
The largest stake in Solaredge Technologies Inc (NASDAQ:SEDG) was held by Impax Asset Management, which reported holding $198.2 million worth of stock at the end of September. It was followed by Rima Senvest Management with a $91.2 million position. Other investors bullish on the company included Millennium Management, Citadel Investment Group, and D E Shaw. In terms of the portfolio weights assigned to each position Noked Capital allocated the biggest weight to Solaredge Technologies Inc (NASDAQ:SEDG), around 7.67% of its 13F portfolio. Montanaro Asset Management is also relatively very bullish on the stock, designating 4.73 percent of its 13F equity portfolio to SEDG.
Judging by the fact that Solaredge Technologies Inc (NASDAQ:SEDG) has witnessed a decline in interest from the entirety of the hedge funds we track, we can see that there were a few hedge funds that slashed their positions entirely last quarter. At the top of the heap, Jack Woodruff’s Candlestick Capital Management cut the biggest investment of the 750 funds watched by Insider Monkey, worth about $25.6 million in stock. Steve Cohen’s fund, Point72 Asset Management, also cut its stock, about $14.6 million worth. These bearish behaviors are interesting, as total hedge fund interest was cut by 4 funds last quarter.
Let’s now review hedge fund activity in other stocks similar to Solaredge Technologies Inc (NASDAQ:SEDG). These stocks are Nordson Corporation (NASDAQ:NDSN), W.P. Carey Inc. (NYSE:WPC), Lightspeed Commerce Inc. (NYSE:LSPD), Masco Corporation (NYSE:MAS), News Corp (NASDAQ:NWS), Lumen Technologies, Inc. (NYSE:LUMN), and Eastman Chemical Company (NYSE:EMN). This group of stocks’ market values are closest to SEDG’s market value.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| NDSN | 29 | 310857 | -5 |
| WPC | 24 | 142763 | -5 |
| LSPD | 26 | 631903 | -3 |
| MAS | 29 | 528895 | -6 |
| NWS | 13 | 130888 | -6 |
| LUMN | 25 | 941373 | -8 |
| EMN | 30 | 254650 | 3 |
| Average | 25.1 | 420190 | -4.3 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 25.1 hedge funds with bullish positions and the average amount invested in these stocks was $420 million. That figure was $594 million in SEDG’s case. Eastman Chemical Company (NYSE:EMN) is the most popular stock in this table. On the other hand News Corp (NASDAQ:NWS) is the least popular one with only 13 bullish hedge fund positions. Compared to these stocks Solaredge Technologies Inc (NASDAQ:SEDG) is more popular among hedge funds. Our overall hedge fund sentiment score for SEDG is 77.8. 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, SEDG wasn’t nearly as popular as these 5 stocks and hedge funds that were betting on SEDG were disappointed as the stock returned -10.2% 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.
