With the first-quarter round of 13F filings behind us it is time to take a look at the stocks in which some of the best money managers in the world preferred to invest or sell heading into the second quarter of 2021. One of these stocks was Solaredge Technologies Inc (NASDAQ:SEDG).
Solaredge Technologies Inc (NASDAQ:SEDG) shareholders have witnessed an increase in activity from the world’s largest hedge funds in recent months. Solaredge Technologies Inc (NASDAQ:SEDG) was in 32 hedge funds’ portfolios at the end of March. The all time high for this statistic was previously 31. This means the bullish number of hedge fund positions in this stock currently sits at its all time high. Our calculations also showed that SEDG isn’t among the 30 most popular stocks among hedge funds (click for Q1 rankings).
Why do we pay any attention at all to hedge fund sentiment? Our research has shown that a select group of hedge fund holdings outperformed the S&P 500 ETFs by 115 percentage points since March 2017 (see the details here). That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
Philip Hempleman of Ardsley Partners
At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, lithium mining is one of the fastest growing industries right now, so we are checking out stock pitches like this emerging lithium stock. 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. 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. Keeping this in mind let’s view the fresh hedge fund action encompassing Solaredge Technologies Inc (NASDAQ:SEDG).
Do Hedge Funds Think SEDG Is A Good Stock To Buy Now?
Heading into the second quarter of 2021, a total of 32 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 14% from the fourth quarter of 2020. The graph below displays the number of hedge funds with bullish position in SEDG over the last 23 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.
More specifically, Impax Asset Management was the largest shareholder of Solaredge Technologies Inc (NASDAQ:SEDG), with a stake worth $158.2 million reported as of the end of March. Trailing Impax Asset Management was Citadel Investment Group, which amassed a stake valued at $78.5 million. Polar Capital, Montanaro Asset Management, and D E Shaw 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 Montanaro Asset Management allocated the biggest weight to Solaredge Technologies Inc (NASDAQ:SEDG), around 5.78% of its 13F portfolio. Quaero Capital is also relatively very bullish on the stock, earmarking 4.32 percent of its 13F equity portfolio to SEDG.
As aggregate interest increased, key hedge funds have been driving this bullishness. Marshall Wace LLP, managed by Paul Marshall and Ian Wace, established the largest position in Solaredge Technologies Inc (NASDAQ:SEDG). Marshall Wace LLP had $12.8 million invested in the company at the end of the quarter. Catherine D. Wood’s ARK Investment Management also made a $5.3 million investment in the stock during the quarter. The other funds with new positions in the stock are Philip Hempleman’s Ardsley Partners, Peter Rathjens, Bruce Clarke and John Campbell’s Arrowstreet Capital, and David Costen Haley’s HBK Investments.
Let’s now review hedge fund activity in other stocks – not necessarily in the same industry as Solaredge Technologies Inc (NASDAQ:SEDG) but similarly valued. These stocks are Bio-Techne Corporation (NASDAQ:TECH), Liberty Global plc (NASDAQ:LBTYA), The Boston Beer Company Inc (NYSE:SAM), Devon Energy Corporation (NYSE:DVN), Ares Management Corp (NYSE:ARES), Cognex Corporation (NASDAQ:CGNX), and Lumen Technologies, Inc. (NYSE:LUMN). This group of stocks’ market values are similar to SEDG’s market value.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| TECH | 23 | 411800 | -1 |
| LBTYA | 35 | 848078 | -1 |
| SAM | 29 | 903673 | -6 |
| DVN | 52 | 1466337 | 7 |
| ARES | 16 | 565174 | -4 |
| CGNX | 34 | 498509 | 3 |
| LUMN | 32 | 1004948 | 3 |
| Average | 31.6 | 814074 | 0.1 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 31.6 hedge funds with bullish positions and the average amount invested in these stocks was $814 million. That figure was $421 million in SEDG’s case. Devon Energy Corporation (NYSE:DVN) is the most popular stock in this table. On the other hand Ares Management Corp (NYSE:ARES) is the least popular one with only 16 bullish hedge fund positions. Solaredge Technologies Inc (NASDAQ:SEDG) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for SEDG is 61.2. 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 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 22.8% in 2021 through July 2nd and beat the market again by 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 -3.9% since the end of March (through 7/2) 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 many of these stocks already outperformed the market since 2019.
Follow Solaredge Technologies Inc. (NASDAQ:SEDG)
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Disclosure: None. This article was originally published at Insider Monkey.
