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SolarCity Corp (SCTY): Hedge Fund Dumps 800,000 Shares

SunEdison SUNEQ

SolarCity Corp (NASDAQ:SCTY) saw a major shareholder dump a large quantity of company stock. One of the biggest SolarCity investors sold off nearly 800,000 shares at the end of the first quarter. By the time June came to an end, the hedge fund controlled just a little more than 43,000 shares of the struggling Elon Musk-backed solar firm.

SolarCity Corp Almost Says Goodbye to Hedge Fund

Gilder Gagnon Howe & Co. owned about 24 percent, or 832,139 shares, at the start of the January-to-March period of this year. The hedge fund would then sell off 788,299 shares and own just 43,840 shares of SolarCity stock. This is one of the biggest selloffs in company history.

SolarCity Corp (SCTY)

It wasn’t all that bad for Musk, though. The same hedge fund would raise its stake in Tesla Motors Inc (NASDAQ:TSLA). It increased its position to 808,661 shares, or 24 percent.

The reason for the SolarCity selloff and the increased stake in Tesla is unknown. But the transfer came at around the time of the announcement that Musk wanted to merge SolarCity and Tesla. It also came after it was pointed out by analysts that six of the seven members of SolarCity’s board have a direct connection with Musk and his relatives.

CtW Investor Group, a major shareholder in Tesla, aired its grievances over this fact. The owner of more than 200,000 Tesla shares noted that the only person without any relationship with Musk is Donald Kendall, CEO of investment management firm Kenmont.

“This is particularly questionable when six out of our seven board members have ties to SolarCity,” CtW wrote in a letter to Tesla. “This raises a serious question about whose interests the board is serving — the stockholders of Tesla or the stockholders of SolarCity.”

Year-to-date, SolarCity shares are down by nearly 54 percent at just under $24. Since around the time Musk made the announcement regarding the merger, SolarCity shares have slipped close to six percent. Tesla shares have fallen more than six percent YTD, but has climbed one percent in the last month.

SolarCity Corp Heading in the Right Direction?

Analysts and investors alike have highlighted their concerns about SolarCity’s future. Some feel it’s headed in the wrong direction, while others are holding out hope that the solar firm can turn its fortunes around.

Musk, the Product Architect at SolarCity and Tesla, recently announced that the company will unveil two new products this year. One of them he already did during a second-quarter earnings call. And that is an integrated solar rooftop that will be designed at its brand new gigafactory in Buffalo.

SolarCity will develop and sell a roof integrated with solar panels.

“It’s a solar roof, as opposed to modules on a roof,” Musk told investors last week. “I think this is really a fundamental part of achieving differentiated product strategy, where you have a beautiful roof. It’s not a thing on the roof. It is the roof.”

The new products would help alleviate concerns that SolarCity isn’t competitive enough. CEO Lyndon Rive, Musk’s cousin, stated that the new products will help SolarCity enter new markets. This could also help SolarCity increase its market share once again.

Decreasing costs of solar technology have led to rampant competition. SolarCity has seen its market share dwindle to just 50 percent, down from close to 60 percent, in the last year or so.

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