We have been waiting for this for a year and finally the third quarter ended up showing a nice bump in the performance of small-cap stocks. Both the S&P 500 and Russell 2000 were up since the end of the second quarter, but small-cap stocks outperformed the large-cap stocks by double digits. This is important for hedge funds, which are big supporters of small-cap stocks, because their investors started pulling some of their capital out due to poor recent performance. It is very likely that equity hedge funds will deliver better risk adjusted returns in the second half of this year. In this article we are going to look at how this recent market trend affected the sentiment of hedge funds towards Clean Energy Fuels Corp (NASDAQ:CLNE), and what that likely means for the prospects of the company and its stock.
Clean Energy Fuels Corp (NASDAQ:CLNE) investors should pay attention to a decrease in hedge fund sentiment recently. There were 12 hedge funds in our database with CLNE holdings 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 boost in popularity but it may still be less popular than similarly priced stocks. That’s why at the end of this article we will examine companies such as Francesca’s Holdings Corp (NASDAQ:FRAN), CoLucid Pharmaceuticals Inc (NASDAQ:CLCD), and Sanchez Energy Corp (NYSE:SN) to gather more data points.
Follow Clean Energy Fuels Corp. (NASDAQ:CLNE)
Follow Clean Energy Fuels Corp. (NASDAQ:CLNE)
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 Clean Energy Fuels Corp (NASDAQ:CLNE)
At the end of the third quarter, a total of 11 of the hedge funds tracked by Insider Monkey held long positions in this stock, a loss of 8% from the previous quarter. By comparison, 10 hedge funds held shares or bullish call options in CLNE heading into this year. With hedge funds’ capital changing hands, there exists an “upper tier” of noteworthy hedge fund managers who were increasing their holdings considerably (or already accumulated large positions).
When looking at the institutional investors followed by Insider Monkey, Renaissance Technologies, one of the largest hedge funds in the world, holds the largest position in Clean Energy Fuels Corp (NASDAQ:CLNE). Renaissance Technologies has a $14.5 million position in the stock. Coming in second is Israel Englander’s Millennium Management holding a $9 million position. Other peers that hold long positions include D. E. Shaw’s D E Shaw, Peter Muller’s PDT Partners and David Costen Haley’s HBK Investments. We should note that none of these hedge funds are 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.
Since Clean Energy Fuels Corp (NASDAQ:CLNE) has faced falling interest from hedge fund managers, it’s easy to see that there were a few funds who sold off their full holdings heading into Q4. Interestingly, Robert Vollero and Gentry T. Beach’s Vollero Beach Capital Partners got rid of the largest investment of the 700 funds tracked by Insider Monkey, comprising close to $1.5 million in stock. Glenn Russell Dubin’s fund, Highbridge Capital Management, also sold off its stock, about $0.4 million worth.
Let’s now review hedge fund activity in other stocks similar to Clean Energy Fuels Corp (NASDAQ:CLNE). These stocks are Francesca’s Holdings Corp (NASDAQ:FRAN), CoLucid Pharmaceuticals Inc (NASDAQ:CLCD), Sanchez Energy Corp (NYSE:SN), and Angie’s List Inc (NASDAQ:ANGI). This group of stocks’ market valuations are closest to CLNE’s market valuation.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| FRAN | 24 | 141500 | 3 |
| CLCD | 18 | 118710 | 18 |
| SN | 12 | 64128 | 0 |
| ANGI | 11 | 76703 | 0 |
As you can see these stocks had an average of 16 hedge funds with bullish positions and the average amount invested in these stocks was $100 million. That figure was $32 million in CLNE’s case. Francesca’s Holdings Corp (NASDAQ:FRAN) is the most popular stock in this table. On the other hand Angie’s List Inc (NASDAQ:ANGI) is the least popular one with only 11 bullish hedge fund positions. Compared to these stocks Clean Energy Fuels Corp (NASDAQ:CLNE) is even less popular than ANGI. Considering that hedge funds aren’t fond of this stock in relation to other companies analyzed in this article, it may be a good idea to analyze it in detail and understand why the smart money isn’t behind this stock. This isn’t necessarily bad news. Although it is possible that hedge funds may think the stock is overpriced and view the stock as a short candidate, they may not be very familiar with the bullish thesis. In either case more research is warranted.
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