Looking for high-potential stocks? Just follow the big players within the hedge fund industry. Why should you do so? Let’s take a brief look at what statistics have to say about hedge funds’ stock picking abilities to illustrate. The Standard and Poor’s 500 Index returned approximately 7.6% in the 12 months ending November 21, with more than 51% of the stocks in the index failing to beat the benchmark. Therefore, the odds that one will pin down a winner by randomly picking a stock are less than the odds in a fair coin-tossing game. Conversely, best performing hedge funds’ 30 preferred mid-cap stocks generated a return of 18% during the same 12-month period. Coincidence? It might happen to be so, but it is unlikely. Our research covering a 17-year period indicates that hedge funds’ stock picks generate superior risk-adjusted returns. That’s why we believe it is wise to check hedge fund activity before you invest your time or your savings on a stock like Sunrun Inc (NASDAQ:RUN) .
Hedge fund interest in Sunrun Inc (NASDAQ:RUN) shares was flat at the end of last quarter. This is usually a negative indicator. At the end of this article we will also compare RUN to other stocks including Fiesta Restaurant Group Inc (NASDAQ:FRGI), Republic Bancorp, Inc. KY (NASDAQ:RBCAA), and Chegg Inc (NYSE:CHGG) to get a better sense of its popularity.
Follow Sunrun Inc. (NASDAQ:RUN)
Follow Sunrun Inc. (NASDAQ:RUN)
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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Keeping this in mind, let’s check out the new action surrounding Sunrun Inc (NASDAQ:RUN).
What have hedge funds been doing with Sunrun Inc (NASDAQ:RUN)?
At the end of the third quarter, a total of 11 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 0% from the second quarter of 2016. By comparison, 15 hedge funds held shares or bullish call options in RUN heading into this year. So, let’s examine which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
According to publicly available hedge fund and institutional investor holdings data compiled by Insider Monkey, Quentec Asset Management, led by Ken Hahn, holds the number one position in Sunrun Inc (NASDAQ:RUN). Quentec Asset Management has a $21.8 million position in the stock, comprising 3% of its 13F portfolio. The second most bullish fund manager is Baupost Group, led by Seth Klarman, holding a $17.9 million position; 0.3% of its 13F portfolio is allocated to the stock. Some other members of the smart money that hold long positions contain Joshua Friedman and Mitchell Julis’s Canyon Capital Advisors, Steve Cohen’s Point72 Asset Management and Bernard Lambilliotte’s Ecofin Ltd. We should note that none of these elite funds are among our list of the 100 best performing elite funds which is based on the performance of their 13F long positions in non-microcap stocks.
Seeing as Sunrun Inc (NASDAQ:RUN) has gone through neutral sentiment from the entirety of the hedge funds we track, it’s easy to see that there is a sect of fund managers who were dropping their entire stakes heading into Q4. At the top of the heap, Brian Taylor’s Pine River Capital Management got rid of the largest position of all the hedgies tracked by Insider Monkey, worth an estimated $0.3 million in stock. D E Shaw, one of the biggest hedge funds in the world, also said goodbye to its stock, about $0.1 million worth.
Let’s go over hedge fund activity in other stocks – not necessarily in the same industry as Sunrun Inc (NASDAQ:RUN) but similarly valued. These stocks are Fiesta Restaurant Group Inc (NASDAQ:FRGI), Republic Bancorp, Inc. KY (NASDAQ:RBCAA), Chegg Inc (NYSE:CHGG), and Intrawest Resorts Holdings Inc (NYSE:SNOW). This group of stocks’ market caps are similar to RUN’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| FRGI | 21 | 121695 | 4 |
| RBCAA | 5 | 19468 | 0 |
| CHGG | 13 | 84752 | 4 |
| SNOW | 10 | 36175 | 2 |
As you can see these stocks had an average of 12.25 hedge funds with bullish positions and the average amount invested in these stocks was $66 million. That figure was $62 million in RUN’s case. Fiesta Restaurant Group Inc (NASDAQ:FRGI) is the most popular stock in this table. On the other hand Republic Bancorp, Inc. KY (NASDAQ:RBCAA) is the least popular one with only 5 bullish hedge fund positions. Sunrun Inc (NASDAQ:RUN) 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 FRGI might be a better candidate to consider taking a long position in.
