In this article, via an analysis based on the latest available institutional 13-F filings, we identify the alternative energy company stocks that are being accumulated and those being distributed by legendary or guru fund managers. We have included in this group companies operating in the solar and wind groups, as well as biofuel-based companies. The legendary or guru fund managers included, such as Warren Buffet, George Soros, Carl Icahn, Steven Cohen and Mario Gabelli, are well-known for their savvy in picking winning stocks year after year. Taken together, these guru fund managers are bearish on the alternative energy group, cutting a net $122 million in Q4 from their $963 million prior quarter holdings in the group (for more general information on these guru funds, please look at the end of the article).
The following are the alternative energy companies that these guru fund managers are most bullish about, that are also projected based on consensus analyst estimates to grow their revenues at a high growth rate over the next two years (see Table):
Trina Solar Ltd. (TSL): TSL is a vertically-integrated Chinese manufacturer of mono-crystalline ingots, wafers and cells to the assembly of high quality solar modules. A total of three guru funds hold 22.1% of the outstanding shares, with two buying and none selling during the quarter. Also, together guru funds added a net $10 million to their $108 million prior quarter position in the company. The top guru fund buyer was the Oracle of Australia Kerr Neilson's hedge fund Platinum Investment Management ($9 million), and the top holders were Platinum ($62 million) and Tiger Cub and Star Manager Lee Ainslie's hedge fund Maverick Capital ($51 million).
TSL shares have surged in the last month, along with the rest of the solar group, up more than 20% from the lows a month ago, and a up about 10% YTD, after a punishing 70% fall in 2011. Analysts are projecting that revenues may hit a bottom this year, and that year-over-year comparisons will begin to look more favorable in the second half of the year and next year, with revenues projected to rise from the current low-$400 million quarterly revenue level to $1.78 billion in 2012 and $2.17 billion in FY 2013, Meanwhile, losses are also projected to rise to 67c in 2012 and then reverse to a 60c profit in 2013.
Solazyme Inc. (SZYM): SZYM is engaged in the production of renewable oils from low-cost sugar feedstocks for use as fuels and chemicals, nutrition, and for skin and personal care. A total of four guru funds hold 2.8% of the outstanding shares, with two buying and none selling during the quarter. Also, together guru funds added a net $3 million to their $14 million prior quarter position in the company. The top guru fund buyer was Driehaus Capital Management ($1.5 million), and the top holder was billionaire star fund manager Stephen Cohen's hedge fund SAC Capital Advisors ($13 million). SZYM reported its Q1 (March) on Monday, beating analyst earnings estimates (28c loss v/s 30c loss), and with revenues slightly down sequentially and up 75% year-over-year. Analysts are projecting strong revenue growth going forward from the current $45 million on TTM (trailing-twelve-month) basis to a projected $123 million in FY 2013 based on the average of eight analyst estimates on Yahoo.
The following are some additional stocks in the alternative energy group that guru managers accumulated in Q4 (see Table):
- Sunpower Corp. (SPWR), that is an integrated solar products and services company that designs, manufactures, and delivers solar electric systems for residential, commercial, and utility-scale power plant customers worldwide, in which guru funds together added a net $5 million in Q4 to their $18 million prior quarter position in the company;
- A123 Systems Inc. (AONE), that manufactures rechargeable lithium-ion batteries and battery systems for transportation, utility and consumer markets, in which guru funds together added a new $1 million position in Q4; and
- Rentech Inc. (RTK), that is engaged in the commercialization of its proprietary Rentech-SilvaGas biomass gasification process that converts multiple biomass feedstocks into synthesis gas (syngas) for the production of renewable fuels and power, in which guru funds together added a new $1 million position in Q4.
Besides these, guru fund managers based on their Q4 trading activity indicated that they are bearish on the following stocks in the alternative energy group:
- Yingli Green Energy (YGE), that is a Chinese manufacturer engaged in the design, development, marketing, manufacture, installation, and sale of photovoltaic products, including PV cells, PV modules, and integrated PV systems, as well as poly-silicon ingots, blocks, and wafers, in which guru funds together cut a net $31 million in Q4 from their $62 million prior quarter position;
- First Solar Inc. (FSLR), that manufactures and sells solar modules using a thin-film semiconductor technology for residential and commercial markets in the U.S., Europe and Asia, in which guru funds together cut a net $10 million in Q4 from their $91 million prior quarter position;
- Power One Inc. (PWER), that designs, manufactures, and markets power conversion and power management solutions for the renewable energy, communications infrastructure, and other high technology markets, in which guru funds together cut a net $8 million in Q4 from their $9 million prior quarter position;
- Maxwell Technologies Inc. (MXWL), that is a leading developer and manufacturer of innovative, cost-effective storage and power delivery solutions, including the manufacture of high-voltage capacitors, ultra-capacitors and radiation-mitigated micro-electronics, in which guru funds together cut a net $6 million in Q4 from their $18 million prior quarter position;
- GT Advanced Tech Inc. (GTAT), that provides poly-silicon production technology and multi-crystalline ingot growth systems, and related photovoltaic (PV) manufacturing services for the solar industry worldwide, in which guru funds together cut a net $3 million in Q4 from their $22 million prior quarter position;
- Archer Daniels Midland (ADM), mainly a processer and marketer of agricultural commodities, and also the largest ethanol producer in the U.S., in which guru funds together cut a net $3 million in Q4 from their $155 million prior quarter position;
- STR Holdings Inc. (STRI), a provider of solar cell module encapsulants for the solar industry worldwide, that hold a module together and protect the embedded semiconductor circuits, in which guru funds together cut out completely their $2 million prior quarter position; and
- LDK Solar Co. (LDK), that is a Chinese manufacturer of multi-crystalline solar wafers that are the principal raw material used to produce solar cells, in which guru funds together cut out completely their $1 million prior quarter position.
General Methodology and Background Information: The latest available institutional 13-F filings of over 85+ legendary or guru hedge fund and mutual fund managers, such as Warren Buffet, George Soros, Carl Icahn, Steven Cohen and Mario Gabelli, were analyzed to determine their capital allocation from among different industry groupings, and to determine their favorite picks and pans in each group. The hedge fund and mutual fund managers included in this select 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 those mentioned above, 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. 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 85-odd guru funds that justify their inclusion in this elite group were detailed in our previous articles that can be accessed from our author page
These legendary or guru fund managers number less than one percent of all funds and yet they control over 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.
This article is part of a series on institutional holdings in various industry groups and sectors, and other articles in the series for this and prior quarters can be accessed from our author page.
Credit: Fundamental data in this article were based on SEC filings, 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, but may initiate a long position in FSLR over the next 72 hours.