Hedge Funds Have Never Been More Bullish On Sunrun Inc (RUN)
Is Sunrun Inc (NASDAQ:RUN) a good equity to bet on right now? We like to check what the smart money thinks first before doing extensive research on a given stock. Although there have been several high profile failed hedge fund picks, the consensus picks among hedge fund investors have historically outperformed the market after adjusting for known risk attributes. It's not surprising given that hedge funds have access to better information and more resources to predict the winners in the stock market.
Sunrun Inc (NASDAQ:RUN) has experienced an increase in hedge fund interest of late. RUN was in 18 hedge funds' portfolios at the end of the third quarter of 2019. There were 17 hedge funds in our database with RUN holdings at the end of the previous quarter. Our calculations also showed that RUN isn't among the 30 most popular stocks among hedge funds (click for Q3 rankings and see the video below for Q2 rankings).
Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.
In the financial world there are a large number of tools investors have at their disposal to grade stocks. A pair of the most under-the-radar tools are hedge fund and insider trading indicators. We have shown that, historically, those who follow the top picks of the best fund managers can outperform the broader indices by a solid amount. Insider Monkey's flagship best performing hedge funds strategy returned 91% since May 2014 and outperformed the Russell 2000 ETFs by nearly 40 percentage points. Our short strategy outperformed the S&P 500 short ETFs by 20 percentage points annually (see the details here). That's why we believe hedge fund sentiment is a useful indicator that investors should pay attention to.
[caption id="attachment_26088" align="aligncenter" width="508"]
Chase Coleman of Tiger Global[/caption]
We leave no stone unturned when looking for the next great investment idea. For example Europe is set to become the world's largest cannabis market, so we check out this European marijuana stock pitch. One of the most bullish analysts in America just put his money where his mouth is. He says, "I'm investing more today than I did back in early 2009." So we check out his pitch. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. We also rely on the best performing hedge funds' buy/sell signals. We're going to take a gander at the fresh hedge fund action surrounding Sunrun Inc (NASDAQ:RUN).
What does smart money think about Sunrun Inc (NASDAQ:RUN)?
Heading into the fourth quarter of 2019, a total of 18 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 6% from the previous quarter. Below, you can check out the change in hedge fund sentiment towards RUN over the last 17 quarters. So, let's find out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
Among these funds, Tiger Global Management held the most valuable stake in Sunrun Inc (NASDAQ:RUN), which was worth $479.5 million at the end of the third quarter. On the second spot was Arosa Capital Management which amassed $24.7 million worth of shares. Ardsley Partners, Millennium Management, and Two Sigma Advisors were also very fond of the stock, becoming one of the largest hedge fund holders of the company. In terms of the portfolio weights assigned to each position Ardsley Partners allocated the biggest weight to Sunrun Inc (NASDAQ:RUN), around 4.78% of its 13F portfolio. Arosa Capital Management is also relatively very bullish on the stock, earmarking 4.4 percent of its 13F equity portfolio to RUN.
Now, key hedge funds have been driving this bullishness. Parian Global Management, managed by Zachary Miller, established the most valuable position in Sunrun Inc (NASDAQ:RUN). Parian Global Management had $4.9 million invested in the company at the end of the quarter. Ken Griffin's Citadel Investment Group also initiated a $4 million position during the quarter. The other funds with brand new RUN positions are Noam Gottesman's GLG Partners, Louis Bacon's Moore Global Investments, and Matthew Hulsizer's PEAK6 Capital Management.
Let's go over hedge fund activity in other stocks - not necessarily in the same industry as Sunrun Inc (NASDAQ:RUN) but similarly valued. We will take a look at Lions Gate Entertainment Corp. (NYSE:LGF-A), Lions Gate Entertainment Corp. (NYSE:LGF-B), Capitol Federal Financial, Inc. (NASDAQ:CFFN), and Evoqua Water Technologies Corp. (NYSE:AQUA). All of these stocks' market caps are closest to RUN's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position LGF-A,16,179155,-5 LGF-B,15,184828,0 CFFN,14,145455,3 AQUA,14,151340,1 Average,14.75,165195,-0.25 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 14.75 hedge funds with bullish positions and the average amount invested in these stocks was $165 million. That figure was $583 million in RUN's case. Lions Gate Entertainment Corp. (NYSE:LGF-A) is the most popular stock in this table. On the other hand Capitol Federal Financial, Inc. (NASDAQ:CFFN) is the least popular one with only 14 bullish hedge fund positions. Compared to these stocks Sunrun Inc (NASDAQ:RUN) is more popular among hedge funds. Our calculations showed that top 20 most popular stocks among hedge funds returned 37.4% in 2019 through the end of November and outperformed the S&P 500 ETF (SPY) by 9.9 percentage points. Unfortunately RUN wasn't nearly as popular as these 20 stocks and hedge funds that were betting on RUN were disappointed as the stock returned -16.9% during the first two months of the fourth quarter and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 20 most popular stocks among hedge funds as 70 percent of these stocks already outperformed the market in Q4.
Disclosure: None. This article was originally published at Insider Monkey.
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