Insider Monkey has processed numerous 13F filings of hedge funds and successful value investors to create an extensive database of hedge fund holdings. The 13F filings show the hedge funds’ and successful investors’ positions as of the end of the third quarter. You can find articles about an individual hedge fund’s trades on numerous financial news websites. However, in this article, we will take a look at their collective moves over the last 4 years and analyze what the smart money thinks of FuelCell Energy, Inc. (NASDAQ:FCEL) based on that data.
FuelCell Energy, Inc. (NASDAQ:FCEL) has experienced a decrease in hedge fund sentiment in recent months. FCEL was in 3 hedge funds’ portfolios at the end of the third quarter of 2019. There were 7 hedge funds in our database with FCEL holdings at the end of the previous quarter. Our calculations also showed that FCEL isn’t among the 30 most popular stocks among hedge funds (click for Q3 rankings and see the video below for Q2 rankings).
Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.
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. Our research has shown that hedge funds’ large-cap stock picks indeed failed to beat the market between 1999 and 2016. However, we were able to identify in advance a select group of hedge fund holdings that outperformed the Russell 2000 ETFs by 40 percentage points since May 2014 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that’ll significantly underperform the market. We have been tracking and sharing the list of these stocks since February 2017 and they lost 27.8% through November 21, 2019. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
Cliff Asness of AQR Capital Management
We leave no stone unturned when looking for the next great investment idea. For example, Discover is offering this insane cashback card, so we look into shorting the stock. One of the most bullish analysts in America just put his money where his mouth is. He says, “I’m investing more today than I did back in early 2009.” So we check out his pitch. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. We even check out this option genius’ weekly trade ideas. This December, we recommended Adams Energy as a one-way bet based on an under-the-radar fund manager’s investor letter and the stock already gained 20 percent. With all of this in mind we’re going to view the key hedge fund action surrounding FuelCell Energy, Inc. (NASDAQ:FCEL).
Hedge fund activity in FuelCell Energy, Inc. (NASDAQ:FCEL)
At the end of the third quarter, a total of 3 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -57% from one quarter earlier. Below, you can check out the change in hedge fund sentiment towards FCEL over the last 17 quarters. So, let’s see which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
Among these funds, Levin Capital Strategies held the most valuable stake in FuelCell Energy, Inc. (NASDAQ:FCEL), which was worth $0.2 million at the end of the third quarter. On the second spot was AQR Capital Management which amassed $0.1 million worth of shares. Citadel Investment Group was 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, Levin Capital Strategies allocated the biggest weight to FuelCell Energy, Inc. (NASDAQ:FCEL), around 0.03% of its 13F portfolio. AQR Capital Management is also relatively very bullish on the stock, setting aside 0.0001 percent of its 13F equity portfolio to FCEL.
Seeing as FuelCell Energy, Inc. (NASDAQ:FCEL) has experienced falling interest from hedge fund managers, logic holds that there exist a select few money managers that slashed their positions entirely by the end of the third quarter. Intriguingly, Sander Gerber’s Hudson Bay Capital Management said goodbye to the largest investment of all the hedgies watched by Insider Monkey, comprising about $0.5 million in stock. Jim Simons (founder)’s fund, Renaissance Technologies, also said goodbye to its stock, about $0 million worth. These moves are interesting, as total hedge fund interest fell by 4 funds by the end of the third quarter.
Let’s now take a look at hedge fund activity in other stocks – not necessarily in the same industry as FuelCell Energy, Inc. (NASDAQ:FCEL) but similarly valued. We will take a look at Melinta Therapeutics, Inc. (NASDAQ:MLNT), CohBar, Inc. (NASDAQ:CWBR), Lincoln Educational Services Corporation (NASDAQ:LINC), and Ascena Retail Group Inc (NASDAQ:ASNA). This group of stocks’ market caps are closest to FCEL’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| MLNT | 4 | 2690 | -2 |
| CWBR | 4 | 509 | 2 |
| LINC | 4 | 12664 | -1 |
| ASNA | 12 | 10244 | 0 |
| Average | 6 | 6527 | -0.25 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 6 hedge funds with bullish positions and the average amount invested in these stocks was $7 million. That figure was $0 million in FCEL’s case. Ascena Retail Group Inc (NASDAQ:ASNA) is the most popular stock in this table. On the other hand Melinta Therapeutics, Inc. (NASDAQ:MLNT) is the least popular one with only 4 bullish hedge fund positions. Compared to these stocks FuelCell Energy, Inc. (NASDAQ:FCEL) is even less popular than MLNT. Hedge funds clearly dropped the ball on FCEL as the stock delivered strong returns, though hedge funds’ consensus picks still generated respectable returns. Our calculations showed that top 20 most popular stocks among hedge funds returned 37.4% in 2019 through the end of November and outperformed the S&P 500 ETF (SPY) by 9.9 percentage points. A small number of hedge funds were also right about betting on FCEL as the stock returned 106.1% during the fourth quarter (through the end of November) and outperformed the market by an even larger margin.
Disclosure: None. This article was originally published at Insider Monkey.
