Hedge Funds Have Never Been This Bullish On Plug Power, Inc. (PLUG)

In this article we will take a look at whether hedge funds think Plug Power, Inc. (NASDAQ:PLUG) is a good investment right now. We check hedge fund and billionaire investor sentiment before delving into hours of research. Hedge funds spend millions of dollars on Ivy League graduates, unconventional data sources, expert networks, and get tips from investment bankers and industry insiders. Sure they sometimes fail miserably, but their consensus stock picks historically outperformed the market after adjusting for known risk factors.

Plug Power, Inc. (NASDAQ:PLUG) was in 34 hedge funds’ portfolios at the end of June. The all time high for this statistic was previously 25. This means the bullish number of hedge fund positions in this stock currently sits at its all time high. PLUG investors should pay attention to an increase in hedge fund sentiment in recent months. There were 25 hedge funds in our database with PLUG positions at the end of the first quarter. Our calculations also showed that PLUG isn’t among the 30 most popular stocks among hedge funds (click for Q2 rankings).

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 79 percentage points since March 2017 (see the details here). So you can still find a lot of gems by following hedge funds’ moves today.

At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, we like undervalued, EBITDA-positive growth stocks, so we are checking out stock pitches like this emerging biotech 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. Now we’re going to take a peek at the recent hedge fund action encompassing Plug Power, Inc. (NASDAQ:PLUG).

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

At the end of the second quarter, a total of 34 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 36% from the previous quarter. Below, you can check out the change in hedge fund sentiment towards PLUG over the last 24 quarters. With the smart money’s positions undergoing their usual ebb and flow, there exists a select group of key hedge fund managers who were boosting their stakes considerably (or already accumulated large positions).

More specifically, D E Shaw was the largest shareholder of Plug Power, Inc. (NASDAQ:PLUG), with a stake worth $507 million reported as of the end of June. Trailing D E Shaw was Millennium Management, which amassed a stake valued at $146.9 million. Citadel Investment Group, Citadel Investment Group, and Point72 Asset Management 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 Quaero Capital allocated the biggest weight to Plug Power, Inc. (NASDAQ:PLUG), around 5.12% of its 13F portfolio. Heathbridge Capital Management is also relatively very bullish on the stock, setting aside 3.14 percent of its 13F equity portfolio to PLUG.

Now, key hedge funds have been driving this bullishness. Point72 Asset Management, managed by Steve Cohen, created the biggest position in Plug Power, Inc. (NASDAQ:PLUG). Point72 Asset Management had $22.1 million invested in the company at the end of the quarter. Robert Richards’s Heathbridge Capital Management also made a $11.7 million investment in the stock during the quarter. The other funds with brand new PLUG positions are Anand Parekh’s Alyeska Investment Group, Steve Zheng’s Deepcurrents Investment Group, and Mark Coe’s Intrinsic Edge Capital.

Let’s now take a look at hedge fund activity in other stocks similar to Plug Power, Inc. (NASDAQ:PLUG). We will take a look at Regions Financial Corporation (NYSE:RF), Cenovus Energy Inc (NYSE:CVE), GrubHub Inc (NYSE:GRUB), Mid America Apartment Communities Inc (NYSE:MAA), Coupa Software Incorporated (NASDAQ:COUP), KB Financial Group, Inc. (NYSE:KB), and Bio-Rad Laboratories, Inc. (NYSE:BIO). This group of stocks’ market valuations resemble PLUG’s market valuation.

View table here if you experience formatting issues.

As you can see these stocks had an average of 29.4 hedge funds with bullish positions and the average amount invested in these stocks was $1073 million. That figure was $878 million in PLUG’s case. Coupa Software Incorporated (NASDAQ:COUP) is the most popular stock in this table. On the other hand KB Financial Group, Inc. (NYSE:KB) is the least popular one with only 8 bullish hedge fund positions. Plug Power, Inc. (NASDAQ:PLUG) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for PLUG is 68.3. 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. 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 21.8% in 2021 through October 11th and beat the market again by 4.4 percentage points. Unfortunately PLUG wasn’t nearly as popular as these 5 stocks and hedge funds that were betting on PLUG were disappointed as the stock returned -19.1% since the end of June (through 10/11) 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.

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

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