It’s a little-known fact that stock performance is not evenly distributed (i.e. you don’t have a 50/50 chance of picking a market-beating stock). In fact, despite the S&P 500 gaining about 5.2% between November 1, 2014 and October 30, 2015, less than 49% of the stocks in the index beat the market during that time. In contrast, the 30 stocks from the index which were the most popular among the investors that we track returned 9.5% during that time and 63% of them beat the market. This shows that while hedge funds get a lot of flak from the mainstream media for their performance, it can be rewarding to follow their moves using the right sets of data. Even then, there is never a fool proof strategy to generating returns, as even the collective wisdom of top hedge funds gets it wrong some times, as in the case of some of their top picks from the index like Micron and Anadarko. The data though, shows that following the collective wisdom of select hedge funds can be a very wise move overall.
Sunedison Inc (NYSE:SUNE) was in 73 hedge funds’ portfolios at the end of September. SUNE has seen a decrease in support from the world’s most elite money managers lately. There were 93 hedge funds in our database with SUNE 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 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 Chemed Corporation (NYSE:CHE), FS Investment Corporation (NYSE:FSIC), and DSW Inc. (NYSE:DSW) to gather more data points.
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Now, we’re going to take a glance at the latest action surrounding Sunedison Inc (NYSE:SUNE).
How have hedgies been trading Sunedison Inc (NYSE:SUNE)?
Heading into Q4, a total of 73 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -22% from one quarter earlier. With hedgies’ positions undergoing their usual ebb and flow, there exists a select group of notable hedge fund managers who were boosting their stakes substantially (or already accumulated large positions).
According to publicly available hedge fund and institutional investor holdings data compiled by Insider Monkey, Greenlight Capital, managed by David Einhorn, holds the largest position in Sunedison Inc (NYSE:SUNE). Greenlight Capital has a $133.6 million position in the stock, comprising 2.2% of its 13F portfolio. The second largest stake is held by David Gallo of Valinor Management LLC, with a $111.8 million position; 3% of its 13F portfolio is allocated to the stock. Other members of the smart money that are bullish comprise Karthik Sarma’s SRS Investment Management, Larry Robbins’s Glenview Capital and Jeffrey Tannenbaum’s Fir Tree.
Due to the fact that Sunedison Inc (NYSE:SUNE) has faced a declination in interest from the smart money, logic holds that there were a few money managers that elected to cut their full holdings last quarter. It’s worth mentioning that Dan Loeb’s Third Point dropped the biggest investment of all the hedgies monitored by Insider Monkey, comprising close to $370.9 million in stock. Stephen Mandel’s fund, Lone Pine Capital, also said goodbye to its stock, about $289 million worth. These bearish behaviors are interesting, as aggregate hedge fund interest was cut by 20 funds last quarter.
Let’s also examine hedge fund activity in other stocks similar to Sunedison Inc (NYSE:SUNE). We will take a look at Chemed Corporation (NYSE:CHE), FS Investment Corporation (NYSE:FSIC), DSW Inc. (NYSE:DSW), and INC Research Holdings Inc (NASDAQ:INCR). All of these stocks’ market caps are closest to SUNE’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| CHE | 14 | 190086 | 3 |
| FSIC | 8 | 9735 | 0 |
| DSW | 29 | 292252 | -7 |
| INCR | 25 | 208713 | 6 |
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 $175 million. That figure was $1,057 million in SUNE’s case. DSW Inc. (NYSE:DSW) is the most popular stock in this table. On the other hand FS Investment Corporation (NYSE:FSIC) is the least popular one with only 8 bullish hedge fund positions. Compared to these stocks Sunedison Inc (NYSE:SUNE) is more popular among hedge funds. Considering that hedge funds are fond of this stock in relation to its market cap peers, it may be a good idea to analyze it in detail and potentially include it in your portfolio.
