Do Hedge Funds Love Maxeon Solar Technologies, Ltd. (MAXN)?

Hedge funds and large money managers usually invest with a focus on the long-term horizon and, therefore, short-lived dips or bumps on the charts usually don’t make them change their opinion towards a company. This time it may be different. The coronavirus pandemic destroyed the high correlations among major industries and asset classes. We are now in a stock pickers market where fundamentals of a stock have more effect on the price than the overall direction of the market. As a result we observe sudden and large changes in hedge fund positions depending on the news flow. Let’s take a look at the hedge fund sentiment towards Maxeon Solar Technologies, Ltd. (NASDAQ:MAXN) to find out whether there were any major changes in hedge funds’ views.

Is Maxeon Solar Technologies, Ltd. (NASDAQ:MAXN) a buy here? The best stock pickers were becoming less confident. The number of bullish hedge fund positions decreased by 1 recently. Maxeon Solar Technologies, Ltd. (NASDAQ:MAXN) was in 6 hedge funds’ portfolios at the end of March. The all time high for this statistic is 7. Our calculations also showed that MAXN isn’t among the 30 most popular stocks among hedge funds (click for Q1 rankings). There were 7 hedge funds in our database with MAXN positions at the end of the fourth quarter.

Hedge funds’ reputation as shrewd investors has been tarnished in the last decade as their hedged returns couldn’t keep up with the unhedged returns of the market indices. Hedge funds have more than $3.5 trillion in assets under management, so you can’t expect their entire portfolios to beat the market by large margins. Our research was able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by more than 115 percentage points since March 2017 (see the details here). So you can still find a lot of gems by following hedge funds’ moves today.

Sander Gerber of Hudson Bay Capital

At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, an activist hedge fund owns nearly 40% of this $24 biotech stock and is trying to buy the rest for around $50. So, we recommended a long position to our monthly premium newsletter subscribers. We go through lists like the 10 best battery 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. 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. With all of this in mind we’re going to check out the recent hedge fund action surrounding Maxeon Solar Technologies, Ltd. (NASDAQ:MAXN).

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

At the end of the first quarter, a total of 6 of the hedge funds tracked by Insider Monkey were long this stock, a change of -14% from the previous quarter. By comparison, 0 hedge funds held shares or bullish call options in MAXN a year ago. So, let’s find out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

The largest stake in Maxeon Solar Technologies, Ltd. (NASDAQ:MAXN) was held by MAK Capital One, which reported holding $5.2 million worth of stock at the end of December. It was followed by CaaS Capital with a $5.1 million position. Other investors bullish on the company included Citadel Investment Group, Graham Capital Management, and D E Shaw. In terms of the portfolio weights assigned to each position MAK Capital One allocated the biggest weight to Maxeon Solar Technologies, Ltd. (NASDAQ:MAXN), around 1.23% of its 13F portfolio. CaaS Capital is also relatively very bullish on the stock, setting aside 0.06 percent of its 13F equity portfolio to MAXN.

Judging by the fact that Maxeon Solar Technologies, Ltd. (NASDAQ:MAXN) has faced bearish sentiment from the entirety of the hedge funds we track, we can see that there lies a certain “tier” of money managers that elected to cut their positions entirely last quarter. At the top of the heap, Ken Griffin’s Citadel Investment Group cut the biggest investment of all the hedgies monitored by Insider Monkey, totaling an estimated $1.2 million in stock. Michael Gelband’s fund, ExodusPoint Capital, also said goodbye to its stock, about $0.2 million worth. These transactions are important to note, as aggregate hedge fund interest was cut by 1 funds last quarter.

Let’s also examine hedge fund activity in other stocks similar to Maxeon Solar Technologies, Ltd. (NASDAQ:MAXN). We will take a look at Romeo Power, Inc. (NYSE:RMO), Douglas Dynamics Inc (NYSE:PLOW), Arcos Dorados Holdings Inc (NYSE:ARCO), So-Young International Inc. (NASDAQ:SY), Tekla Healthcare Investors (NYSE:HQH), First Foundation Inc (NASDAQ:FFWM), and Energy Recovery, Inc. (NASDAQ:ERII). This group of stocks’ market valuations match MAXN’s market valuation.

View table here if you experience formatting issues.

As you can see these stocks had an average of 10 hedge funds with bullish positions and the average amount invested in these stocks was $34 million. That figure was $12 million in MAXN’s case. First Foundation Inc (NASDAQ:FFWM) is the most popular stock in this table. On the other hand Tekla Healthcare Investors (NYSE:HQH) is the least popular one with only 1 bullish hedge fund positions. Maxeon Solar Technologies, Ltd. (NASDAQ:MAXN) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for MAXN is 46.4. 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 negative signal and we’d rather spend our time researching stocks that hedge funds are piling on. 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 19.3% in 2021 through June 25th and surpassed the market again by 4.8 percentage points. Unfortunately MAXN wasn’t nearly as popular as these 5 stocks (hedge fund sentiment was quite bearish); MAXN investors were disappointed as the stock returned -36.5% since the end of March (through 6/25) 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 most of these stocks already outperformed the market in 2021.

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