Chase Coleman (Trades, Portfolio), founder of Tiger Global Management and one of Julian Robertson (Trades, Portfolio)’s former “tiger cubs,” disclosed he trimmed his stake in Sunrun Inc. RUN (NASDAQ:RUN) for the third time this month.
The guru’s New York-based hedge fund is known for focusing on small-cap stocks and technology startups, having become an early investor in Facebook Inc. FB (NASDAQ:FB) and Spotify Technology SA (NYSE:SPOT).
According to GuruFocus Real-Time Picks, a Premium feature, Coleman reduced his stake by 17.02% on Oct. 16, selling 4 million shares of the solar panel manufacturer. The transaction had an impact of -0.97% on the equity portfolio. The stock traded for an average price $62.39 per share on the day of the trade.
The guru now holds 19.5 million shares, which represent 4.76% of the equity portfolio. GuruFocus estimates he has gained 427.51% on the investment since the first quarter of 2018.
The San Francisco-based company, which manufactures, sells and installs residential solar energy systems, has a $12.54 billion; its shares were trading around $64.17 on Monday with a price-book ratio of 8.81 and a price-sales ratio of 9.19.
The Peter Lynch chart shows the stock is trading above its fair value, suggesting it is overpriced.
On Oct. 8, Sunrun announced it completed its acquisition of Vivint Solar, solidifying its leading position in providing home solar and energy services in the U.S. Per the terms of the agreement, Vivint shareholders received 0.55 shares of Sunrun common stock for each share held.
In a statement, Sunrun CEO Lynn Jurich welcomed Vivent’s customers and employees.
“Together, we will provide affordable, reliable and clean electricity at an exciting new scale,” she said. “With our compelling services, millions of homeowners will rewire their homes with solar and batteries to enjoy enhanced comfort and affordability. The combined company benefits from broad market reach and differentiated consumer offerings. A lower cost structure from greater scale will accelerate the transition away from polluting and unreliable fossil fuels.”
The company is slated to report its third-quarter results after the closing bell on Nov. 5.
GuruFocus rated Sunrun’s financial strength 2 out of 10. As a result of issuing $1.6 billion in new long-term debt over the past three years, the company has poor interest coverage. In addition, the low Altman Z-Score of 1.61 warns the company could be at risk of going bankrupt, especially since its assets are building up at a faster rate than revenue is growing.
The company’s profitability scored a 4 out of 10 rating. Although the operating margin is expanding, Sunrun is being weighed down by a negative return on capital that underperforms a majority of competitors as well as a weak Piotroski F-Score of 2, which implies business conditions are in poor shape. The company has also recorded a loss in operating income over the past three years and declining revenue per share for the past 12 months.
Despite the reduction, Coleman is still the company’s largest guru shareholder with 9.94% of its outstanding shares. Philippe Laffont (Trades, Portfolio), Pioneer Investments (Trades, Portfolio), Caxton Associates (Trades, Portfolio) and Steven Cohen (Trades, Portfolio) also have positions in Sunrun.
Over half of Coleman’s $25.79 billion equity portfolio, which was composed of 73 stocks as of June 30, is invested in the technology and consumer cyclical sectors.
As of the end of the second quarter, the guru’s five largest holdings were JD.com Inc. (NASDAQ:JD), Microsoft Corp. (NASDAQ:MSFT), Facebook, Apollo Global Management Inc. (NYSE:APO) and Amazon.com Inc. (NASDAQ:AMZN).
Disclosure: No positions.
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Source: Forbes – Money