Billionaire investor Steve Cohen just bought millions of shares of SunEdison, Inc. (NYSE:SUNE). Should you follow?
First, let’s pause for a second and take a look at what’s happening right now: the U.S. stock market is plunging. At around 3:00 p.m. E.T. on Tuesday September 1st, the Dow is down 2.40%; the NASDAQ is down 2.33%; and the S&P 500 is down 2.44%.
How is SunEdison doing? Its stock price shot up 7.86% to $11.22 against a backdrop of a plunging market.
According to SunEdison’s SEC filing, Steve Cohen owns 15.95 million shares, or a 5.1% stake of the company. At SunEdison’s current share price of $11.22, Cohen’s stake is worth approximately $179 million. (Source: The Securities and Exchange Commission, last accessed September 1, 2015.)
SunEdison, Inc. is a global renewable energy company headquartered in the U.S. The company develops, installs, owns, and operates solar power plants and wind energy plants.
Last year, one of SunEdison’s yieldco subsidiaries, TerraForm Power, Inc. (NASDAQ:TERP), went public. The company raised around $500 million in the IPO. Another one of SunEdison’s yield companies, TerraForm Global, Inc. (NASDAQ:GLBL), went public on July 31st this year.
SunEdison’s shareholders have probably not been in a very good mood in the past month. After posting larger-than-expected quarterly loss on August 6th, the company’s shares tumbled. SunEdison’s stock price plunged 25.3% on that single day, and the downward trend continued as the U.S. stock market entered a correction phase. By Tuesday afternoon, SunEdison has lost half of its value in one month.
As SunEdison’s stock price tumbles, investors started to see the value in this company. Most recently, JPMorgan Chase & Co. (NYSE:JPM) and Macquarie Group Ltd. initiated coverage of the company with the equivalent of buy ratings.
According to Bloomberg, most analysts have a bullish outlook for the stock. There are 12 “buy” ratings, four “holds,” and only one “sell” for SunEdison. (Source: Bloomberg, last accessed September 1, 2015.)
Paul Coster, analyst at JPMorgan, considers SunEdison to be “executing on massive long-term growth opportunities.” The analyst says that “SunEdison is positioned to capture a meaningful share of the $100s of billions of annual cash flow that will be generated from the operation of wind, solar and hydro assets.”
Angie Storozynski, analyst at Macquarie Group, shared the view. “Demand for renewable power projects will continue to grow worldwide regardless of the level of oil prices.”