At Insider Monkey we track the activity of some of the best-performing hedge funds like Appaloosa Management, Baupost, and Third Point because we determined that some of the stocks that they are collectively bullish on can help us generate returns above the broader indices. Out of thousands of stocks that hedge funds invest in, small-caps can provide the best returns over the long term due to the fact that these companies are less efficiently priced and are usually under the radars of mass-media, analysts and dumb money. This is why we follow the smart money moves in the small-cap space.
SunPower Corporation (NASDAQ:SPWR) investors should be aware of a decrease in enthusiasm from smart money in recent months. SPWR was in 18 hedge funds’ portfolios at the end of September. There were 19 hedge funds in our database with SPWR positions at the end of the previous quarter. The level and the change in hedge fund popularity aren’t the only variables you need to analyze to decipher hedge funds’ perspectives. A stock may witness a decline in popularity but it may still be more popular than similarly priced stocks. That’s why at the end of this article we will examine companies such as Terreno Realty Corporation (NYSE:TRNO), AVG Technologies NV (NYSE:AVG), and M.D.C. Holdings, Inc. (NYSE:MDC) to gather more data points.
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At Insider Monkey, we’ve developed an investment strategy that has delivered market-beating returns over the past 12 months. Our strategy identifies the 100 best-performing funds of the previous quarter from among the collection of 700+ successful funds that we track in our database, which we accomplish using our returns methodology. We then study the portfolios of those 100 funds using the latest 13F data to uncover the 30 most popular mid-cap stocks (market caps of between $1 billion and $10 billion) among them to hold until the next filing period. This strategy delivered 18% gains over the past 12 months, more than doubling the 8% returns enjoyed by the S&P 500 ETFs.
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Hedge fund activity in SunPower Corporation (NASDAQ:SPWR)
At Q3’s end, a total of 18 of the hedge funds tracked by Insider Monkey held long positions in this stock, a fall of 5% from the second quarter of 2016. By comparison, 22 hedge funds held shares or bullish call options in SPWR heading into this year. So, let’s find out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
When looking at the institutional investors followed by Insider Monkey, Impax Asset Management, led by Ian Simm, holds the number one position in SunPower Corporation (NASDAQ:SPWR). Impax Asset Management has a $14 million position in the stock. The second largest stake is held by Ken Hahn of Quentec Asset Management, with a $7 million position; the fund has 1% of its 13F portfolio invested in the stock. Remaining peers that are bullish contain Steve Cohen’s Point72 Asset Management, Bernard Lambilliotte’s Ecofin Ltd and Kenneth Tropin’s Graham Capital Management. We should note that Impax Asset Management is among our list of the 100 best performing hedge funds which is based on the performance of their 13F long positions in non-microcap stocks.
Because SunPower Corporation (NASDAQ:SPWR) has faced a decline in interest from hedge fund managers, it’s safe to say that there lies a certain “tier” of funds that slashed their positions entirely by the end of the third quarter. Interestingly, Mike Masters’ Masters Capital Management dropped the biggest investment of all the hedgies watched by Insider Monkey, worth about $30.9 million in call options, and John A. Levin’s Levin Capital Strategies was right behind this move, as the fund dumped about $3.1 million worth of shares.
Let’s check out hedge fund activity in other stocks – not necessarily in the same industry as SunPower Corporation (NASDAQ:SPWR) but similarly valued. These stocks are Terreno Realty Corporation (NYSE:TRNO), AVG Technologies NV (NYSE:AVG), M.D.C. Holdings, Inc. (NYSE:MDC), and Oclaro, Inc. (NASDAQ:OCLR). This group of stocks’ market values match SPWR’s market value.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| TRNO | 9 | 21755 | 0 |
| AVG | 14 | 64320 | -4 |
| MDC | 11 | 62421 | -1 |
| OCLR | 41 | 247621 | 12 |
As you can see these stocks had an average of 19 hedge funds with bullish positions and the average amount invested in these stocks was $99 million. That figure was $53 million in SPWR’s case. Oclaro, Inc. (NASDAQ:OCLR) is the most popular stock in this table. On the other hand Terreno Realty Corporation (NYSE:TRNO) is the least popular one with only 9 bullish hedge fund positions. SunPower Corporation (NASDAQ:SPWR) is not the least popular stock in this group but hedge fund interest is still below average. This is a slightly negative signal and we’d rather spend our time researching stocks that hedge funds are piling on. In this regard OCLR might be a better candidate to consider taking a long position in.
Disclosure: None
