Top Solar-Focused Hedge Funds Revealed

Date: Tuesday, May 12, 2009
Author: Todd Walker, HedgeCo.Net

HedgeTracker.com recently released its list of Top Solar-Focused Hedge Funds. 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 12/31/08, the top funds had between 7.9% and 21% of their assets invested in the solar sector. The hedge fund with the highest exposure to the solar sector was Ionic Capital Management, which held over 21% of its $207 mm assets in US Solar companies. The firm’s positions were widely spread across 6 solar companies {Suntech Power Holdings (STP) $18.3mm, LDK Solar Co. (LDK) $10.7mm, Energy Conversion Devices (ENER) $5.4mm, Trina Solar (TSL) $3.2mm, Solarfun Power Holdings (SOLF) $3.2mm, JA Solar Holdings (JASO) $2.4mm}. Notably, the hedge fund manager, which has a Deep Value investment style, had no exposure to First Solar (FSLR), which was overwhelmingly the favorite among the other 4 managers on the list.

In fact, Tracer Capital Management (TCM), which held 10% of its assets in the solar sector, held all of its solar assets ($19mm) in FSLR. TCM is a NY-based hedge fund manager that was founded in 2003 by Matthew Hastings and Riley McCormack. Prior to TCM, the two cofounders worked at Coatue Capital Management.

The largest investor on the list is Miura Global Management, which held $86mm or 11.8% of its $726mm in assets in the solar sector. Miura’s positions include FLSR $55.1mm, LDK $30mm, and TSL $0.7mm. Notably, over the 4th quarter of 2008, the firm closed out of four other investments it had in the solar sector, including Yingli Green Energy (YGE) -$19 mm, Solarfun Power (SOLF) -$3.3 mm, JA Solar Holdings (JASO) -$2.8 mm, and SunPower Corp. (SPWRA) -$2.7. Miura is a Long/Short Equity manager that made Barron’s 2007 Hedge Fund 50 for its cumulative 3-year return of 26.25% from July 2004 to July 2007.

The final two hedge funds are technology-focused Crosslink Capital with 9.4% of $332mm and growth-focused Hellman, Jordan Management with 7.9% of 216 mm. For individual investors that don’t have millions to invest, Jordan, Hellman Management also offers a mutual fund, the Jordan Opportunity Fund.

Another prominent hedge fund that was examined in the study is Chase Coleman’s Tiger Global Management. Tiger Global was the biggest hedge fund buyer of solar stocks over the 4th quarter of 2008 with approximately $65 million. Tiger bought $23.9 mm in LDK, bringing its total holding in the solar company to $33.1. The firm also built new positions in YGE ($12.5 mm) and JASO ($28.8 mm).

Mr. Coleman founded Tiger Global in 2001 after a successful stint as a technology analyst for legendary investor Julian Robertson’s Tiger Management. Ironically, the largest seller of the sector was Maverick Capital, which was founded by another one of Robertson’s “Tiger Cubs,” Lee S. Ainslie. Maverick Capital sold a total of -$140 mm in solar stocks over the quarter, which included -$104.8 mm in FSLR and -$35.8 mm in YGE. According to their filing, the firm still held $98.7 mm in FSLR, but had no exposure to YGE.