We hate to say this but, we told you so. On February 27th we published an article with the title Recession is Imminent: We Need A Travel Ban NOW and predicted a US recession when the S&P 500 Index was trading at the 3150 level. We also told you to short the market and buy long-term Treasury bonds. Our article also called for a total international travel ban. While we were warning you, President Trump minimized the threat and failed to act promptly. As a result of his inaction, we will now experience a deeper recession (see why hell is coming).
In these volatile markets we scrutinize hedge fund filings to get a reading on which direction each stock might be going. 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 first quarter. One of these stocks was Solaredge Technologies Inc (NASDAQ:SEDG).
Is Solaredge Technologies Inc (NASDAQ:SEDG) a healthy stock for your portfolio? The best stock pickers are buying. The number of long hedge fund positions went up by 7 in recent months. Our calculations also showed that SEDG isn’t among the 30 most popular stocks among hedge funds (click for Q4 rankings and see the video at the end of this article for Q3 rankings). SEDG was in 28 hedge funds’ portfolios at the end of December. There were 21 hedge funds in our database with SEDG holdings at the end of the previous quarter.
Today there are a lot of formulas market participants employ to assess stocks. Some of the most underrated formulas are hedge fund and insider trading indicators. Our experts have shown that, historically, those who follow the top picks of the best fund managers can outperform the market by a significant margin (see the details here).
Jim Simons of Renaissance Technologies
We leave no stone unturned when looking for the next great investment idea. For example we recently identified a stock that trades 25% below the net cash on its balance sheet. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences, and go through short-term trade recommendations like this one. We even check out the recommendations of services with hard to believe track records. Our best call in 2020 was shorting the market when S&P 500 was trading at 3150 after realizing the coronavirus pandemic’s significance before most investors. Keeping this in mind let’s take a gander at the latest hedge fund action encompassing Solaredge Technologies Inc (NASDAQ:SEDG).
How are hedge funds trading Solaredge Technologies Inc (NASDAQ:SEDG)?
At the end of the fourth quarter, a total of 28 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 33% from the third quarter of 2019. Below, you can check out the change in hedge fund sentiment towards SEDG over the last 18 quarters. 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 Solaredge Technologies Inc (NASDAQ:SEDG) was held by Rima Senvest Management, which reported holding $79.2 million worth of stock at the end of September. It was followed by Renaissance Technologies with a $45.6 million position. Other investors bullish on the company included Noked Capital, Arrowstreet Capital, and Polar Capital. In terms of the portfolio weights assigned to each position Noked Capital allocated the biggest weight to Solaredge Technologies Inc (NASDAQ:SEDG), around 46.36% of its 13F portfolio. Rima Senvest Management is also relatively very bullish on the stock, dishing out 5.38 percent of its 13F equity portfolio to SEDG.
As aggregate interest increased, key money managers have jumped into Solaredge Technologies Inc (NASDAQ:SEDG) headfirst. Arrowstreet Capital, managed by Peter Rathjens, Bruce Clarke and John Campbell, initiated the biggest position in Solaredge Technologies Inc (NASDAQ:SEDG). Arrowstreet Capital had $38.9 million invested in the company at the end of the quarter. Brian Ashford-Russell and Tim Woolley’s Polar Capital also initiated a $37.9 million position during the quarter. The other funds with new positions in the stock are Ian Simm’s Impax Asset Management, Donald Sussman’s Paloma Partners, and Gavin Saitowitz and Cisco J. del Valle’s Springbok Capital.
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. We will take a look at Ashland Global Holdings Inc.. (NYSE:ASH), Flowers Foods, Inc. (NYSE:FLO), Darling Ingredients Inc. (NYSE:DAR), and PacWest Bancorp (NASDAQ:PACW). All of these stocks’ market caps are closest to SEDG’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| ASH | 30 | 1068070 | -3 |
| FLO | 20 | 237755 | -11 |
| DAR | 16 | 294979 | -11 |
| PACW | 31 | 249581 | 6 |
| Average | 24.25 | 462596 | -4.75 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 24.25 hedge funds with bullish positions and the average amount invested in these stocks was $463 million. That figure was $370 million in SEDG’s case. PacWest Bancorp (NASDAQ:PACW) is the most popular stock in this table. On the other hand Darling Ingredients Inc. (NYSE:DAR) 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 calculations showed that top 20 most popular stocks among hedge funds returned 41.3% in 2019 and outperformed the S&P 500 ETF (SPY) by 10.1 percentage points. These stocks lost 17.4% in 2020 through March 25th but still beat the market by 5.5 percentage points. Hedge funds were also right about betting on SEDG as the stock returned -5.5% during the first quarter (through March 25th) and outperformed the market. Hedge funds were rewarded for their relative bullishness.
Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.
Disclosure: None. This article was originally published at Insider Monkey.
