Legendary fund managers are bullish on the solar group, almost doubling their position in the June quarter by adding a net $454 million to their $488 million prior quarter position in the group. Overall, they are over-weight in the group by a factor of 1.7. That is, taken together, the 60+ high alpha generating legendary or guru fund managers have invested 0.22% of their assets in the group, significantly more than the 0.13% weighting of the group in the overall market.
The hedge fund and mutual fund managers included in this group include only high profile names who by virtue of their long-term market-beating returns have earned their standing in the investment community and are worthy of our attention. They include well-known names such as Warren Buffet, George Soros, Carl Icahn, Steven Cohen and Mario Gabelli, as well as perhaps relatively lesser-known names that also have a stellar long-term history of beating the markets, such as Seth Klarman, John Griffin, Prem Watsa, Robert Karr and Lee Ainslie. The following are the solar stocks that these guru funds are most bullish and bearish about (see Table):
Gurus Bullish on Yingli Green Energy ADS (YGE): YGE is a Chinese manufacturer engaged in the design, development, marketing, manufacture, installation, and sale of photovoltaic (PV) products, including PV cells, PV modules, and integrated PV systems, as well as poly-silicon ingots, blocks, and wafers. Two guru funds hold $92 million of YGE stock, with no changes in the June quarter. Maverick Capital ($92 million) is the sole major holder of YGE. We too are bullish on YGE, as expressed in our review over two weeks ago when the stock traded in the $5.30s, which we reiterated again in our review of last week’s movers in the alternative energy group, based on its recently reported strong June quarter report.
Gurus Bearish on LDK Solar (LDK): LDK is a Cayman Islands-based Chinese manufacturer of multi-crystalline solar wafers used to manufacture solar cells and modules. In addition, it also provides wafer processing services to mono-crystalline and multi-crystalline solar cell and module manufacturers. As of the June quarter filing, no guru fund has a position in this $850 million market-cap solar leader, and they sold their entire $2m million position from the previous quarter. The stock fell off steeply last week after the company reported disastrous guidance for the June quarter, but as we commented earlier this week, most of the downside is already baked into the stock, and it should find support as it nears its all-time lows in the $4-$5 range.
Gurus Bullish on First Solar Inc. (FSLR): FSLR manufactures and sells solar modules using a thin-film semiconductor technology for residential and commercial markets in the U.S., Europe and Asia. Four guru funds hold $422 million of FSLR stock, including $368 million added in the June quarter. Major holders of FSLR include Maverick Capital ($257 million), Ruane Cunniff & Goldfarb Inc. ($102 million) and Hussman Econometrics Advisors Inc. ($59 million).
Gurus Bullish on Trina Solar Ltd ADS (TSL): TSL is a vertically-integrated Chinese manufacturer of mono-crystalline ingots, wafers and cells to the assembly of high quality solar modules. Three guru funds hold $143 million of TSL stock, including $92 million added in the June quarter. Major holders of TSL include Maverick Capital ($117 million) and Platinum Investment Management Ltd. ($117 million).
Gurus Bullish about MEMC Electronic Materials Inc. (WFR): WFR is engaged in the development, manufacture and sale of silicon wafers for the semiconductor industry worldwide. Four guru funds hold $67 million of WFR stock, including a net $14 million added in the June quarter. Major holders of WFR include Schneider Capital Management Corp ($24 million), Third Avenue Management LLC ($21 million), Royce & Associates LLC ($15 million) and SAC Capital Advisors LP ($8 million).
Gurus Bearish on Suntech Power Holdings ADS (STP): STP is a Chinese manufacturer of photo-voltaic cells and module for worldwide distribution. Guru funds are under-invested in this almost billion dollar solar company, as together they hold only $1 million of STP stock.
Gurus Bearish on JA Solar Holdings ADS (JASO): JASO is a Chinese manufacturer of mono-crystalline and multi-crystalline solar cells for solar modules and systems. Guru funds are under-invested in this $600 million solar leader, as only one guru fund owns a $1 million position in the company at the end of the June quarter, down from a total of $2 million owned by guru funds at the end of the prior quarter.
Gurus Bearish on Renesola Ltd. (SOL): SOL is a Chinese manufacturer of mono-crystalline and multi-crystalline wafers for solar power products. As of the end of the June quarter, none of the guru funds have any position in this $300 million market-cap solar company, down from $2 million that guru funds together owned in the prior March quarter.
Gurus Bearish on Sunpower Corp (SPWRA): SPWRA is a San Jose, California-based integrated solar products and services company that designs, manufactures, and delivers solar electric systems for residential, commercial, and utility-scale power plant customers worldwide. Guru funds are under-owned in SPWRA as only two guru funds together hold only $44 million of this $1.4 billion solar market leader, down $18 million from the prior quarter. The sellers included Royce & Associates LLC that sold $14 million of its $16 million position from the prior quarter, and Kingdon Capital Management LLC that completely sold out of its $4 million position in SPWRA.
Gurus Bearish on Hanwha Solarone (HSOL): HSOL is a Chinese manufacturer of photovoltaic modules, photovoltaic cells, silicon ingots and silicon wafers. At the end of the June quarter, only one guru fund, SAC Capital Advisors LP, owned $3 million in HSOL that they bought last quarter.
General Methodology and Background Information: The latest available institutional 13-F filings of over 60+ legendary or guru hedge fund and mutual fund managers were analyzed to determine their capital allocation from among 50+ different industry groupings, and to determine their favorite picks and pans in each group. Each guru has been carefully selected based on their long-term performance and standing in the investment community. Furthermore, the credentials of most of the 60-odd guru funds that justify their inclusion in this elite group were detailed in our previous articles, many of which can be accessed by clicking on the hyperlinks referencing them in the above Table and in article.
These legendary or guru fund managers number less than one percent of all funds and yet they control almost ten percent of the U.S. equity discretionary fund assets. The argument is that institutional investors have the resources and the access to information, knowledge and expertise to conduct extensive due diligence in informing their investment decisions. When high alpha generating or guru Institutional Investors by virtue of their fund performance, low volatility and elite reputation in the investment community, invest and maybe even converge on a specific investment idea, the idea deserves consideration for further investigation. The savvy investor may then leverage this information either as a starting point to conduct his own due diligence or even go as far as constructing a model diversified portfolio based on the guru funds best picks.
Credit: Historical fundamentals including operating metrics and stock ownership information were derived using SEC filings data, I-Metrix® by Edgar Online®, Zacks Investment Research, Thomson Reuters and Briefing.com. The information and data is believed to be accurate, but no guarantees or representations are made.
Disclaimer: Material presented here is for informational purposes only. Nothing in this article should be taken as a solicitation to purchase or sell securities. Before buying or selling any stock you should do your own research and reach your own conclusion. Further, these are our ‘opinions’ and we may be wrong. We may have positions in securities mentioned in this article. You should take this into consideration before acting on any advice given in this article. If this makes you uncomfortable, then do not listen to our thoughts and opinions. The contents of this article do not take into consideration your individual investment objectives so consult with your own financial adviser before making an investment decision. Investing includes certain risks including loss of principal.
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.