In this article we will take a look at whether hedge funds think Sunrun Inc (NASDAQ:RUN) 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.
Is Sunrun Inc (NASDAQ:RUN) a buy right now? Money managers were getting less optimistic. The number of bullish hedge fund positions decreased by 7 lately. Sunrun Inc (NASDAQ:RUN) was in 41 hedge funds’ portfolios at the end of the first quarter of 2021. The all time high for this statistic is 48. Our calculations also showed that RUN isn’t among the 30 most popular stocks among hedge funds (click for Q1 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 115 percentage points since March 2017 (see the details here). So you can still find a lot of gems by following hedge funds’ moves today.
Philippe Laffont of Coatue Management
At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, Federal Reserve has been creating trillions of dollars electronically to keep the interest rates near zero. We believe this will lead to inflation, which is why we are checking out this inflation play. We go through lists like 10 best gold stocks to buy to identify promising stocks. 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. With all of this in mind we’re going to take a look at the key hedge fund action surrounding Sunrun Inc (NASDAQ:RUN).
Do Hedge Funds Think RUN Is A Good Stock To Buy Now?
At Q1’s end, a total of 41 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -15% from one quarter earlier. By comparison, 24 hedge funds held shares or bullish call options in RUN a year ago. With the smart money’s capital changing hands, there exists a select group of key hedge fund managers who were increasing their stakes meaningfully (or already accumulated large positions).
When looking at the institutional investors followed by Insider Monkey, Coatue Management, managed by Philippe Laffont, holds the number one position in Sunrun Inc (NASDAQ:RUN). Coatue Management has a $1.029 billion position in the stock, comprising 5.6% of its 13F portfolio. The second most bullish fund manager is Chase Coleman of Tiger Global Management LLC, with a $427.8 million position; 1% of its 13F portfolio is allocated to the stock. Remaining hedge funds and institutional investors that hold long positions contain Andreas Halvorsen’s Viking Global, Zach Schreiber’s Point State Capital and Glen Kacher’s Light Street Capital. In terms of the portfolio weights assigned to each position Caxton Associates LP allocated the biggest weight to Sunrun Inc (NASDAQ:RUN), around 7.54% of its 13F portfolio. Coatue Management is also relatively very bullish on the stock, setting aside 5.64 percent of its 13F equity portfolio to RUN.
Due to the fact that Sunrun Inc (NASDAQ:RUN) has witnessed declining sentiment from the aggregate hedge fund industry, it’s safe to say that there were a few money managers that decided to sell off their full holdings heading into Q2. It’s worth mentioning that Frank Fu’s CaaS Capital sold off the largest investment of all the hedgies tracked by Insider Monkey, worth an estimated $105.4 million in stock. Josh Resnick’s fund, Jericho Capital Asset Management, also cut its stock, about $84.1 million worth. These transactions are intriguing to say the least, as aggregate hedge fund interest fell by 7 funds heading into Q2.
Let’s now take a look at hedge fund activity in other stocks – not necessarily in the same industry as Sunrun Inc (NASDAQ:RUN) but similarly valued. These stocks are Canopy Growth Corporation (NASDAQ:CGC), Opendoor Technologies Inc. (NASDAQ:OPEN), Quanta Services Inc (NYSE:PWR), RH (NYSE:RH), Cna Financial Corporation (NYSE:CNA), Signature Bank (NASDAQ:SBNY), and Graco Inc. (NYSE:GGG). All of these stocks’ market caps match RUN’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| CGC | 12 | 157087 | -7 |
| OPEN | 33 | 1046505 | 5 |
| PWR | 33 | 897017 | 0 |
| RH | 50 | 2992390 | 8 |
| CNA | 19 | 74356 | 3 |
| SBNY | 40 | 925856 | 12 |
| GGG | 25 | 327418 | 0 |
| Average | 30.3 | 917233 | 3 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 30.3 hedge funds with bullish positions and the average amount invested in these stocks was $917 million. That figure was $2405 million in RUN’s case. RH (NYSE:RH) is the most popular stock in this table. On the other hand Canopy Growth Corporation (NASDAQ:CGC) is the least popular one with only 12 bullish hedge fund positions. Sunrun Inc (NASDAQ:RUN) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for RUN is 61.8. 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 17.4% in 2021 through June 18th and beat the market again by 6.1 percentage points. Unfortunately RUN wasn’t nearly as popular as these 5 stocks and hedge funds that were betting on RUN were disappointed as the stock returned -12.8% since the end of March (through 6/18) 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.
