Partner Fund, Cavalry, Prescott Group Join Top Solar-Focused Hedge Fund List

by: Todd Walker has released its latest list of Top Solar-Focused hedge funds, and the Q1 2009 list includes a few newcomers: Partner Fund Management, Cavalry Asset Management and Prescott Group Capital Management. The funds selected for the list had the greatest percentage of their US equity assets under management invested in US-listed Solar Stocks as of 3/31/09 (see complete list of stocks below).

Like Q4 2008, the Q1 2009 list includes both Tracer Capital Management and Crosslink Capital. Last quarter, NY-based Tracer Capital held all of its solar holdings, 10% of its total equity portfolio, in First Solar Inc. (NASDAQ:FSLR). Tracer Capital diversified its solar portfolio this quarter by purchasing 400,000 shares ($2.4 mm) in Yingli Green Energy Holding (NYSE:YGE). Over the quarter, the hedge fund manager reduced its holdings in FSLR, selling 56,720 shares, bringing its FSLR exposure to 80,000 shares ($10.6 mm). At the end of the first quarter, the firm’s overall investments in the solar sector stood at 8.97% of its $145 mm in equity assets under management.
Sy Kaufman and Michael Stark’s Crosslink Capital remained on the list despite the fact that it sold out of its SunPower Corp (SPWRB) and Energy Conversion Devices (NASDAQ:ENER) positions, -125,800 and -206,700 shares, respectively. The hedge fund manager also trimmed its holdings in First Solar Inc. (FSLR) by 10,700 shares, bringing its holdings to 148,852 shares ($19.75 mm). On the buying side, Crosslink Capital entered into a new position in JA Solar Holdings Co. (NASDAQ:JASO), purchasing 1,608,200 ($5.42 mm). Crosslink Capital’s overall exposure to the solar sector stood at 5.4% of its $464 mm US Equity portfolio.
The largest hedge fund manager on this quarter’s list is newcomer Partner Fund Management, which held 6.49% ($49.38 mm) of its $760mm in assets in the solar sector. The fund was bullish on the sector, as it poured approximately $38.46mm into solar stocks. The San Francisco-based Partner Fund was started in 2004 by Christopher James. In early 2007, the firm’s technology research efforts received a boost when Chris Aristides from Magnetar Capital joined the firm to manage Partner Fund’s technology fund.
Partner Fund’s solar positions include First Solar Inc. (FSLR): 293,585 shares ($39 mm), Suntech Power Holdings (NYSE:STP): 694,952 shares ($8.12 mm), and JA Solar Holdings Co. (JASO): 683,847 shares ($2.3 mm). Over the quarter, Partner Fund purchased 248,925, 594,952, and 442,189 shares in FSLR, JASO, and STP, respectively. Notably, the firm also closed out of three other investments it had in the solar sector, including Yingli Green Energy (YGE) -$1.7mm, LDK Solar Co. Ltd. (NYSE:LDK) -$1.05mm, and Evergreen Solar Inc. (ESLR) -$0.26mm.
Since the last reporting period (3/31/09), only one of the fourteen stocks included in the study saw its stock price fall. From 3/31/09 to 7/31/09, Evergreen Solar’s (ESLR) stock price fell by -1.4%, from $2.13 to $2.10. Overall, over the same period, the total sector market capitalization increased significantly from $18 billion to $28 billion. As of 7/31/2009, the Claymore/MAC Global Solar Energy Index was also up about 34%, highlighting the strong performance of solar stocks.
Standout performers from 3/31/09 to 7/31/09 include Trina Solar Limited (NYSE:TSL), Canadian Solar Inc (NASDAQ:CSIQ), and Yingli Green Energy Holding (YGE), which increased by 171%, 143% and 120%, respectively. Out of the fourteen solar companies, eleven posted returns over 30%. Solar performance over the period was positioned to be more impressive, however, earnings reports at the end of July pushed many of the top solar stocks, such as FSLR, STP, ENER, ESLR, YGE, and SOL, down by as much as 12%.
The next hedge fund manager on the list is San Francisco-based Cavalry Asset Management. The technology-focused firm was founded in 2003 by Managing Member John Hurley. Cavalry invests in public and private investments for approximately twenty universities, foundations and other institutions. At the end of the quarter, the firm held or 4.74% ($24.9 mm) of its $517mm in US equity assets in the solar sector. The bulk of the firm’s sector exposure was held in FSLR, representing 150,000 shares ($19.91 mm), down by -37,728 shares from the end of Q4 2008. On the buying side, Cavalry entered into new positions in JA Solar (JASO): $3.98mm and Trina Solar (TSL): $0.61mm.
The final hedge fund on this quarter’s list is Phil Frohlich’s Oklahoma-based Prescott Group Capital Management. The firm was founded as a private equity firm in 1992 and later expanded into the hedge fund business. Prescott Capital’s overall exposure to the solar sector represented 5.26% ($8.6 mm) of its total $164 mm public equity portfolio. All of the hedge funds current solar positions were new additions to its portfolio, including STP: 452,000 shares ($5.28 mm), JASO: 272,248 shares ($0.92 mm), and YGE: 399,975 shares ($2.41 mm). Notably, Prescott Capital is the only fund in the top 5 with no exposure to FSLR. Over the first quarter, the firm also sold out of its entire ENER position, representing a sell-off of -53,489 shares.
Among the three hedge funds that dropped off the list this quarter, Miura Global Management was the largest seller. Miura Global sold $53.15mm worth of solar stocks, bringing down its sector exposure to 2.54% from 11.8%. Ionic Capital Management was also a large seller as its exposure to solar stocks dropped from 21% of assets under management to 3.59%. The firm sold approximately $32.08mm in solar stocks, selling completely out of its LDK, STP, ENER and JASO positions. Hellman, Jordan Management Co also reduced its solar exposure, as it trimmed its positions in TSL and JASO, as well as selling out of its LDK and FSLR positions.
The solar sector used for this analysis, included: First Solar Inc. (FSLR), Suntech Power Holdings (STP), SunPower Corp. (SPWRA & SPWRB), Yingli Green Energy Holding (YGE), LDK Solar Co. Ltd. (LDK), Energy Conversion Devices (ENER), JA Solar Holdings Co. (JASO), Evergreen Solar Inc. (ESLR), Trina Solar Ltd. (TSL), ReneSola Ltd (NYSE:SOL), Canadian Solar Inc. (CSIQ), Solarfun Power Holdings (SOLF), and Ascent Solar (NASDAQ:ASTI).

For more information on the funds and fund managers mentioned in this article, please see their “Detailed Investor Profiles” below:

Cavalry Asset Management:

Disclosure: Long FSLR