At Insider Monkey, we pore over the filings of nearly 887 top investment firms every quarter, a process we have now completed for the latest reporting period. The data we’ve gathered as a result gives us access to a wealth of collective knowledge based on these firms’ portfolio holdings as of December 31st. In this article, we will use that wealth of knowledge to determine whether or not Sunnova Energy International Inc. (NYSE:NOVA) makes for a good investment right now.
Is NOVA stock a buy or sell? Prominent investors were becoming more confident. The number of long hedge fund positions increased by 9 recently. Sunnova Energy International Inc. (NYSE:NOVA) was in 32 hedge funds’ portfolios at the end of the fourth quarter of 2020. The all time high for this statistic is 23. This means the bullish number of hedge fund positions in this stock currently sits at its all time high. Our calculations also showed that NOVA isn’t among the 30 most popular stocks among hedge funds (click for Q4 rankings). There were 23 hedge funds in our database with NOVA holdings at the end of September.
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’ small-cap stock picks managed to beat the market by double digits annually between 1999 and 2016, but the margin of outperformance has been declining in recent years. Nevertheless, we were still able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by 124 percentage points since March 2017 (see the details here).
Louis Bacon Moore of Moore Capital
At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, the CBD market is growing at a 33% annualized rate, so we are taking a closer look at this under-the-radar hemp stock. We go through lists like the 10 best biotech stocks under $10 to identify the next stock with 10x upside potential. 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 website. Keeping this in mind let’s review the key hedge fund action surrounding Sunnova Energy International Inc. (NYSE:NOVA).
Do Hedge Funds Think NOVA Is A Good Stock To Buy Now?
At the end of the fourth quarter, a total of 32 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 39% from the previous quarter. On the other hand, there were a total of 9 hedge funds with a bullish position in NOVA a year ago. With hedgies’ sentiment swirling, there exists a few noteworthy hedge fund managers who were adding to their holdings meaningfully (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 $108.5 million at the end of the fourth quarter. On the second spot was Sylebra Capital Management which amassed $99 million worth of shares. Light Street Capital, Moore Global Investments, and Driehaus Capital 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 7.45% of its 13F portfolio. Light Street Capital is also relatively very bullish on the stock, earmarking 2.88 percent of its 13F equity portfolio to NOVA.
As one would reasonably expect, specific money managers were breaking ground themselves. Light Street Capital, managed by Glen Kacher, established the largest position in Sunnova Energy International Inc. (NYSE:NOVA). Light Street Capital had $96.5 million invested in the company at the end of the quarter. Frank Fu’s CaaS Capital also initiated a $28.8 million position during the quarter. The other funds with brand new NOVA positions are Principal Global Investors’s Columbus Circle Investors, Noam Gottesman’s GLG Partners, and Dmitry Balyasny’s Balyasny Asset Management.
Let’s now take a look at hedge fund activity in other stocks similar to Sunnova Energy International Inc. (NYSE:NOVA). These stocks are ASGN Incorporated (NYSE:ASGN), Verint Systems Inc. (NASDAQ:VRNT), Workiva Inc (NYSE:WK), eXp World Holdings, Inc. (NASDAQ:EXPI), SSR Mining Inc. (NASDAQ:SSRM), Fox Factory Holding Corp (NASDAQ:FOXF), and KBR, Inc. (NYSE:KBR). All of these stocks’ market caps match NOVA’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| ASGN | 14 | 83196 | -7 |
| VRNT | 20 | 596005 | -7 |
| WK | 19 | 445062 | -1 |
| EXPI | 20 | 169085 | 6 |
| SSRM | 18 | 237785 | 0 |
| FOXF | 15 | 80974 | -7 |
| KBR | 29 | 830771 | -9 |
| Average | 19.3 | 348983 | -3.6 |
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As you can see these stocks had an average of 19.3 hedge funds with bullish positions and the average amount invested in these stocks was $349 million. That figure was $685 million in NOVA’s case. KBR, Inc. (NYSE:KBR) is the most popular stock in this table. On the other hand ASGN Incorporated (NYSE:ASGN) 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 90. 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 30 most popular stocks among hedge funds returned 81.2% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 26 percentage points. These stocks gained 12.2% in 2021 through April 12th and still beat the market by 1.5 percentage points. Unfortunately NOVA wasn’t nearly as popular as these 30 stocks and hedge funds that were betting on NOVA were disappointed as the stock returned -20.4% since the end of the fourth quarter (through 4/12) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 30 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.
