Tiger Global Management founder Chase Coleman (Trades, Portfolio) disclosed this week that his firm established a 7.8% stake in Sunrun Inc. (RUN, Financial) on March 29.
According to GuruFocus real-time picks, Coleman, who is a former “tiger cub” of Tiger Management founder Julian Robertson (Trades, Portfolio), picked up 8.4 million shares of the San Francisco-based solar energy company for an average price of $8.93 per share, giving it 0.59% portfolio space.
The company, which develops and installs solar panels and provides related services, has a market cap of $903.86 million; its shares were trading around $8.39 on Tuesday with a price-earnings ratio of 7.37, a price-book ratio of 1.12 and a price-sales ratio of 1.72. GuruFocus estimates the stock has gained approximately 42% year to date.
According to the Peter Lynch chart below, the stock is undervalued as it is trading below its fair value.
Based on its median price-sales value, however, the stock is trading above its historical average. GuruFocus warning signs also show the current price-sales ratio is near a two-year high.
Since Sunrun has issued approximately $1 billion in new long-term debt over the past several years, GuruFocus rated the company’s financial strength 3 out of 10. In addition, its Altman Z-Score of 0.31 suggests it is in financial distress and could face bankruptcy in the near future.
Its profitability and growth does not fare much better, ranking 4 out of 10. The company is being dragged down by its operating margin of -34.4%, which underperforms 92% of competitors, and a low Piotroski F-Score of 3, which indicates poor business operations.
While Coleman's firm is by far Sunrun’s largest guru shareholder, other big value investors have taken an interest in the stock as well. In the fourth quarter, Pioneer Investments (Trades, Portfolio) established a small position, while Steven Cohen (Trades, Portfolio) added to his holding. Seth Klarman (Trades, Portfolio) is also a shareholder.
Specializing in small-caps and internet companies, Tiger Global’s portfolio of 53 holdings is largely invested in the consumer cyclical and technology sectors. The five largest positions are currently JD.com Inc. (JD, Financial), Booking Holdings Inc. (BKNG, Financial), Amazon.com Inc. (AMZN, Financial), Apollo Global Management LLC (APO, Financial) and Despegar.com Corp. (DESP, Financial).
Disclosure: No positions.
