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Hedge Funds Aren’t Crazy About Sun Communities Inc (SUI) Anymore

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The latest 13F reporting period has come and gone, and Insider Monkey is again at the forefront when it comes to making use of this gold mine of data. Insider Monkey finished processing 873 13F filings submitted by hedge funds and prominent investors. These filings show these funds' portfolio positions as of June 30th, 2021. What do these smart investors think about Sun Communities Inc (NYSE:SUI)?

Sun Communities Inc (NYSE:SUI) shareholders have witnessed a decrease in hedge fund sentiment recently. Sun Communities Inc (NYSE:SUI) was in 30 hedge funds' portfolios at the end of June. The all time high for this statistic is 35. Our calculations also showed that SUI isn't among the 30 most popular stocks among hedge funds (click for Q2 rankings).

So, why do we pay attention to hedge fund sentiment before making any investment decisions? Our research has shown that hedge funds' small-cap stock picks managed to beat the market by double digits annually between 1999 and 2016, but the margin of outperformance has been declining in recent years. Nevertheless, we were still able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by more than 79 percentage points since March 2017 (see the details here). We have been able to outperform the passive index funds by tracking the moves of corporate insiders and hedge funds, and we believe small investors can benefit a lot from reading hedge fund investor letters and 13F filings.

Blair Levinsky of Waratah Capital Advisors
Blair Levinsky of Waratah Capital Advisors

Blair Levinsky of Waratah Capital Advisors

At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, lithium mining is one of the fastest growing industries right now, so we are checking out stock pitches like this emerging lithium stock. We go through lists like the 10 best EV stocks to pick the next Tesla that will deliver a 10x return. Even though we recommend positions in only a tiny fraction of the companies we analyze, we check out as many stocks as we can. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. You can subscribe to our free daily newsletter on our homepage. With all of this in mind we're going to take a look at the latest hedge fund action surrounding Sun Communities Inc (NYSE:SUI).

Do Hedge Funds Think SUI Is A Good Stock To Buy Now?

At Q2's end, a total of 30 of the hedge funds tracked by Insider Monkey were long this stock, a change of -14% from the previous quarter. On the other hand, there were a total of 30 hedge funds with a bullish position in SUI a year ago. With the smart money's sentiment swirling, there exists a few noteworthy hedge fund managers who were boosting their holdings significantly (or already accumulated large positions).

More specifically, Echo Street Capital Management was the largest shareholder of Sun Communities Inc (NYSE:SUI), with a stake worth $204.2 million reported as of the end of June. Trailing Echo Street Capital Management was Waratah Capital Advisors, which amassed a stake valued at $120.3 million. Long Pond Capital, Millennium Management, and Waterfront Capital Partners were also very fond of the stock, becoming one of the largest hedge fund holders of the company. In terms of the portfolio weights assigned to each position Waterfront Capital Partners allocated the biggest weight to Sun Communities Inc (NYSE:SUI), around 5.44% of its 13F portfolio. SW Investment Management is also relatively very bullish on the stock, designating 5.25 percent of its 13F equity portfolio to SUI.

Due to the fact that Sun Communities Inc (NYSE:SUI) has faced a decline in interest from hedge fund managers, it's safe to say that there were a few fund managers that decided to sell off their positions entirely heading into Q3. It's worth mentioning that Frank Fu's CaaS Capital dropped the biggest stake of the "upper crust" of funds tracked by Insider Monkey, worth about $21.9 million in stock. Daniel Johnson's fund, Gillson Capital, also said goodbye to its stock, about $7.3 million worth. These moves are interesting, as aggregate hedge fund interest was cut by 5 funds heading into Q3.

Let's now review hedge fund activity in other stocks - not necessarily in the same industry as Sun Communities Inc (NYSE:SUI) but similarly valued. These stocks are Plug Power, Inc. (NASDAQ:PLUG), Regions Financial Corporation (NYSE:RF), Cenovus Energy Inc (NYSE:CVE), Just Eat Takeaway.com N.V. (NASDAQ:GRUB), Mid America Apartment Communities Inc (NYSE:MAA), Coupa Software Incorporated (NASDAQ:COUP), and KB Financial Group, Inc. (NYSE:KB). All of these stocks' market caps are similar to SUI's market cap.

[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position PLUG,34,878412,9 RF,33,242962,1 CVE,32,562772,9 GRUB,24,609889,-11 MAA,14,79867,-11 COUP,54,4697937,4 KB,8,26390,-1 Average,28.4,1014033,0 [/table]

View table here if you experience formatting issues.

As you can see these stocks had an average of 28.4 hedge funds with bullish positions and the average amount invested in these stocks was $1014 million. That figure was $822 million in SUI's case. Coupa Software Incorporated (NASDAQ:COUP) is the most popular stock in this table. On the other hand KB Financial Group, Inc. (NYSE:KB) is the least popular one with only 8 bullish hedge fund positions. Sun Communities Inc (NYSE:SUI) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for SUI is 49.6. Stocks with higher number of hedge fund positions relative to other stocks as well as relative to their historical range receive a higher sentiment score. Our calculations showed that top 5 most popular stocks among hedge funds returned 95.8% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 40 percentage points. These stocks gained 24.9% in 2021 through October 15th and still beat the market by 4.5 percentage points. Hedge funds were also right about betting on SUI as the stock returned 14.1% since the end of Q2 (through 10/15) and outperformed the market. Hedge funds were rewarded for their relative bullishness.

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Disclosure: None. This article was originally published at Insider Monkey.