In this article, we review why hedge funds are selling and shorting clean energy stocks and we will also examine the 10 most sold clean energy stocks by hedge funds. To skip the detailed analysis of the clean energy industry, go directly to the 5 Most Sold Clean Energy Stocks.
After gaining the confidence of hedge funds and retail investors in recent years, it appears that the clean energy boom has now stalled. Hedge funds are selling energy stocks and shorting clean energy stocks, for a variety of reasons, including the higher interest rate environment. Because these companies rely heavily on debt to support investments in growth opportunities, higher interest rates make that debt more expensive and raise the cost of capital. Furthermore, economic and inventory-related issues contributed to a drop in investor confidence.
Since clean energy stocks are particularly rate-sensitive, the Fed's recent announcement that it would raise interest rates again in late 2023 and hold them there for longer increased volatility in the sector. The S&P 500 clean energy index has fallen more than 5% since the Fed last week communicated a new policy. The index has dropped 26% in the past year and is down 50% from its peak in 2021. Shares of clean energy companies, particularly solar stocks and ETFs, have plummeted in the last twelve months and are now trading well below their previous highs. Furthermore, according to reports, a number of ESG funds have already been liquidated so far in 2023 as a result of losses and outflows. The second-quarter net outflows from ESG funds were $15.4 billion, the third highest since 2013.
Meanwhile, US President Joe Biden is committed to his clean energy plans and has been working hard to strengthen the industry through the American Jobs Plan and Inflation Reduction Act. Last month, speaking at the first anniversary of the Inflation Reduction Act, Biden described the clean-energy legislation as an economic powerhouse, claiming that it will create 1.5 million jobs over the next decade.
True, clean energy projects have attracted billions of dollars in investments in recent years, with average corporate revenue and earnings growth of 13% and 47%, respectively, over the last three years. However, concerns about the recession, regulatory challenges in Europe, higher inventory, and the Fed's tightening policy have had a negative impact on the industry's performance and investor confidence. While the majority of clean energy company shares have fallen significantly in the past twelve months, hedge funds are still betting on a further drop in value. Canadian Solar Inc. (NASDAQ:CSIQ), Plug Power Inc. (NASDAQ:PLUG), Tesla, Inc. (NASDAQ:TSLA), Green Plains Inc. (NASDAQ:GPRE) and SunPower Corporation (NASDAQ:SPWR) are among the 10 most sold clean energy stocks by hedge funds.
Most Sold Clean Energy Stocks
Solar panel workers installing a new farm for clean energy generation. Editorial photo for a financial news article. 8k. --ar 16:9
Our Methodology
For this article, we scanned Insider Monkey’s database of 910 hedge funds and picked the 10 clean energy stocks hedge funds sold the most in the second quarter. That means these clean energy stocks are losing investor confidence and may fall further.
Hedge Funds Selling Energy Stocks: 10 Most Sold Clean Energy Stocks
Shares of Canadian Solar Inc. (NASDAQ:CSIQ) have fallen more than 35% in the last six months due to deteriorating economic conditions and higher interest rates. Furthermore, a lower-than-expected financial outlook raised investor concerns. Canadian Solar Inc. (NASDAQ:CSIQ) anticipates a sharp decline in third-quarter and full-year revenue due to a drop in module average selling prices. Canadian Solar Inc. (NASDAQ:CSIQ) now expects third-quarter revenue in the range of $1.9 billion-$2.1 billion, well below the consensus estimate of $2.51 billion. The full-year revenue forecast is also reduced from the range of $9-$9.5 billion to $8.5-$9 billion.
According to Insider Monkey data, the number of hedge fund positions in Canadian Solar Inc. (NASDAQ:CSIQ) fell to 16 at the end of the second quarter of 2023, down from 17 in the first quarter and 22 in the third quarter of 2022. Ken Griffin’s Citadel Investment Group and Israel Englander’s Millennium Management were among the largest shareholders in Canadian Solar Inc. (NASDAQ:CSIQ). Both hedge funds have increased their stake in Canadian Solar Inc. (NASDAQ:CSIQ).
Plug Power Inc. (NASDAQ:PLUG) has also experienced a steep share price selloff, falling around 66% in the last twelve months. Investors' concerns about larger-than-expected losses in the recent quarters have contributed to the share price drop. Plug Power Inc. (NASDAQ:PLUG) reported a net loss of $0.40 per share in the second quarter, missing an estimate by $0.14 per share. The second quarter loss was also higher than a loss of $173.3 million in the previous quarter. Wall Street analysts anticipate Plug Power Inc. (NASDAQ:PLUG) to report a loss of $1.18 per share in 2023 and $0.49 per share in 2024. The good news is that Plug Power Inc. (NASDAQ:PLUG) is still generating strong revenue growth. Its second-quarter revenue increased 72% to $260.2 million from $151.3 million the previous year.
Hedge fund interest in Plug Power Inc. (NASDAQ:PLUG) has been consistently declining. The number of hedge fund positions in Plug Power Inc. (NASDAQ:PLUG) has decreased for three quarters in a row, standing at 20 at the end of the second quarter. However, Philippe Laffont’s Coatue Management and Steve Cohen’s Point72 Asset Management remain bullish about the company. In the second quarter, both hedge funds increased their stake in Plug Power Inc. (NASDAQ:PLUG).
Unlike Plug Power Inc. (NASDAQ:PLUG) and Canadian Solar Inc. (NASDAQ:CSIQ), Tesla, Inc. (NASDAQ:TSLA) shares have soared by 125% so far in 2023, thanks to robust revenue and production growth. Tesla, Inc. (NASDAQ:TSLA) outperformed revenue and earnings estimates for the second quarter by $0.10 per share and $200 million, respectively. It delivered 466,140 electric vehicles in the second quarter, up from 254,695 in the previous quarter. Tesla, Inc. (NASDAQ:TSLA) expects to outperform its long-term 50% CAGR goal in 2023 by selling around 1.8 million.
Despite a surge in the stock price, the number of hedge fund positions in Tesla, Inc. (NASDAQ:TSLA) declined to 79 in the second quarter from 82 in the previous quarter. Hedge fund positions decreased for the second straight quarter in a row. Baron Funds, an investment management firm, remain bullish on Tesla, Inc. (NASDAQ:TSLA). Here is what Baron Funds stated in the second-quarter investor letter:
Many factors contributed to the strong performance of our largest Disruptive Growth position, Tesla, Inc. (NASDAQ:TSLA), in the period. Investors’ concerns regarding Tesla in 2022 continue to dissipate, and the company’s business has continued to grow materially, although at below peak margins. Tesla’s deliveries in China are recovering. The company’s newest factory in Texas has ramped production and should contribute to improved domestic sales and margins. U.S. government policies have lowered the cost to own Tesla vehicles, while also reducing the company’s battery production expenses.We continue to believe that Tesla is only scratching the surface of its potential. We regard announced partnerships between Tesla and its competitors in the quarter as important. In early June, Tesla agreed to provide Ford Motors access to Tesla’s electric vehicle (EV) charging technology and network. Other traditional and pure EV manufacturers, including General Motors, Rivian, and Volvo, quickly followed suit. We expect additional charging partnerships to ensue. In our view, these relationships validate Tesla’s charging technology and infrastructure as superior to other standards. Consolidation around a single technology should accelerate charging infrastructure deployment, diminish the risk of Tesla’s technology becoming obsolete, and lessen a key concern of hesitant EV purchasers. EV adoption is at a tipping point. And Tesla, with its approximately 60% domestic market share of EVs, should be the most important beneficiary of this shift…” (Click here to read the full text)
The share price of Green Plains Inc. (NASDAQ:GPRE) has performed well despite falling out of favor with hedge funds. Green Plains Inc. (NASDAQ:GPRE) was in 18 hedge fund portfolios at the end of the second quarter compared to 21 in the previous quarter. The number of hedge fund positions in the company has declined for two quarters in a row and is now at its lowest level in the last nine quarters. Declining revenue and higher-than-expected losses lowered hedge funds' confidence in Green Plains Inc. (NASDAQ:GPRE). In the second quarter, its revenue of $857 million fell 15% year on year, and its net loss of $0.89 per share fell short by $0.79 per share. Green Plains Inc. (NASDAQ:GPRE) recently agreed to acquire all of Green Plains Partners (NASDAQ:GPP) common stock as it expects the transaction to help simplify its corporate structure.
Brook Capital Partners, an investment management firm, highlighted various growth prospects of Green Plains Inc. (NASDAQ:GPRE) in the investor letter. Here is what the firm stated about Green Plains Inc. (NASDAQ:GPRE):
“During the quarter, we entered positions in Green Plains Inc. (NASDAQ:GPRE) and in ITV PLC (ITV LN). Green Plains is an ethanol producer undergoing company-specific change by enabling its plants to produce additional products (clean sugar and ultra-high proteins) with the same feedstock -increasing margins and the return on invested capital of the business. This is a common, but Green Plains is amongst the best capitalized to complete the transformation, has unique intellectual property, and is further along in the process than many in the industry. With over 50% of its plants converted to produce clean sugars, and an activist investor now involved, the stock price is unchanged from when I first became interested in Green Plains a year and a half ago.Crucially, two things have occurred today since I began to consider Green Plains for investment.1.The Company is further along in its plant transformation.2.The outlook of the base business has improved…” (Click here to read the full text)
The share price of SunPower Corporation (NASDAQ:SPWR) has dropped 74% in the last year due to deteriorating financial results. SunPower Corporation (NASDAQ:SPWR) is expected to post a loss of $0.13 per share in fiscal year 2023, according to Wall Street. The CEO of SunPower Corporation (NASDAQ:SPWR) attributes lower-than-expected financial results to a weaker residential solar market and higher interest rates. However, he anticipates that the demand for solar will increase in the future due to declining equipment prices and Biden’s tax credit program.
SunPower Corporation (NASDAQ:SPWR), like Canadian Solar Inc. (NASDAQ:CSIQ), Plug Power Inc. (NASDAQ:PLUG), Green Plains Inc. (NASDAQ:GPRE), and Tesla, Inc. (NASDAQ:TSLA), has seen the number of hedge fund positions decline in recent quarters. SunPower Corporation (NASDAQ:SPWR) was in 17 portfolios at the end of the second quarter, down from 20 the previous quarter.
