Hedge Funds Are Buying Sunnova Energy International Inc. (NOVA)

In this article you are going to find out whether hedge funds think Sunnova Energy International Inc. (NYSE:NOVA) is a good investment right now. We like to check what the smart money thinks first before doing extensive research on a given stock. Although there have been several high profile failed hedge fund picks, the consensus picks among hedge fund investors have historically outperformed the market after adjusting for known risk attributes. It’s not surprising given that hedge funds have access to better information and more resources to predict the winners in the stock market.

Sunnova Energy International Inc. (NYSE:NOVA) investors should be aware of an increase in support from the world’s most elite money managers recently. Sunnova Energy International Inc. (NYSE:NOVA) was in 27 hedge funds’ portfolios at the end of September. The all time high for this statistic is 32. Our calculations also showed that NOVA 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. Now let’s take a look at the fresh hedge fund action regarding Sunnova Energy International Inc. (NYSE:NOVA).

Paul Tudor Jones of Tudor Investment Corp

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

At the end of September, a total of 27 of the hedge funds tracked by Insider Monkey were long this stock, a change of 8% from the previous quarter. On the other hand, there were a total of 23 hedge funds with a bullish position in NOVA a year ago. With hedge funds’ capital changing hands, there exists a select group of key hedge fund managers who were upping their holdings significantly (or already accumulated large positions).

Among these funds, Electron Capital Partners held the most valuable stake in Sunnova Energy International Inc. (NYSE:NOVA), which was worth $48.6 million at the end of the third quarter. On the second spot was Sylebra Capital Management which amassed $36.3 million worth of shares. Point72 Asset Management, Millennium Management, and Encompass Capital Advisors were also very fond of the stock, becoming one of the largest hedge fund holders of the company. In terms of the portfolio weights assigned to each position Electron Capital Partners allocated the biggest weight to Sunnova Energy International Inc. (NYSE:NOVA), around 2.57% of its 13F portfolio. Autonomy Capital is also relatively very bullish on the stock, earmarking 2.31 percent of its 13F equity portfolio to NOVA.

As industrywide interest jumped, specific money managers have jumped into Sunnova Energy International Inc. (NYSE:NOVA) headfirst. Luminus Management, managed by Jonathan Barrett and Paul Segal, created the most outsized position in Sunnova Energy International Inc. (NYSE:NOVA). Luminus Management had $1.8 million invested in the company at the end of the quarter. Paul Tudor Jones’s Tudor Investment Corp also made a $1.8 million investment in the stock during the quarter. The other funds with brand new NOVA positions are Alexander Mitchell’s Scopus Asset Management, Ryan Tolkin (CIO)’s Schonfeld Strategic Advisors, and D. E. Shaw’s D E Shaw.

Let’s now review hedge fund activity in other stocks similar to Sunnova Energy International Inc. (NYSE:NOVA). These stocks are Community Bank System, Inc. (NYSE:CBU), Kinsale Capital Group, Inc. (NASDAQ:KNSL), CarGurus, Inc. (NASDAQ:CARG), 23andMe Holding Co. (NASDAQ:ME), Avnet, Inc. (NASDAQ:AVT), Magnite Inc. (NASDAQ:MGNI), and Commercial Metals Company (NYSE:CMC). This group of stocks’ market caps match NOVA’s market cap.

View table here if you experience formatting issues.

As you can see these stocks had an average of 20.4 hedge funds with bullish positions and the average amount invested in these stocks was $218 million. That figure was $193 million in NOVA’s case. Magnite Inc. (NASDAQ:MGNI) is the most popular stock in this table. On the other hand 23andMe Holding Co. (NASDAQ:ME) is the least popular one with only 14 bullish hedge fund positions. Compared to these stocks Sunnova Energy International Inc. (NYSE:NOVA) is more popular among hedge funds. Our overall hedge fund sentiment score for NOVA is 82.3. 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 31.1% in 2021 through December 9th and still beat the market by 5.1 percentage points. Unfortunately NOVA wasn’t nearly as popular as these 5 stocks and hedge funds that were betting on NOVA were disappointed as the stock returned -2.9% since the end of the third quarter (through 12/9) 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 since 2019.

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