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We hate to say this but, we told you so. On February 27th we published an article with the title Recession is Imminent: We Need A Travel Ban NOW and predicted a US recession when the S&P 500 Index was trading at the 3150 level. We also told you to short the market and buy long-term Treasury bonds. Our article also called for a total international travel ban. While we were warning you, President Trump minimized the threat and failed to act promptly. As a result of his inaction, we will now experience a deeper recession (read our latest 10 coronavirus predictions).
In these volatile markets we scrutinize hedge fund filings to get a reading on which direction each stock might be going. 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. We at Insider Monkey have plowed through 835 13F filings that hedge funds and well-known value investors are required to file by the SEC. The 13F filings show the funds' and investors' portfolio positions as of December 31st. In this article we look at what those investors think of Suzano S.A. (NYSE:SUZ).
Suzano S.A. (NYSE:SUZ) shares haven't seen a lot of action during the fourth quarter. Overall, hedge fund sentiment was unchanged. The stock was in 4 hedge funds' portfolios at the end of December. The level and the change in hedge fund popularity aren't the only variables you need to analyze to decipher hedge funds' perspectives. A stock may witness a boost in popularity but it may still be less popular than similarly priced stocks. That's why at the end of this article we will examine companies such as The AES Corporation (NYSE:AES), BanColombia S.A. (NYSE:CIB), and Alliant Energy Corporation (NYSE:LNT) to gather more data points. Our calculations also showed that SUZ isn't among the 30 most popular stocks among hedge funds (click for Q4 rankings and see the video below for Q3 rankings).
Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.
If you'd ask most stock holders, hedge funds are assumed to be worthless, outdated investment tools of the past. While there are over 8000 funds with their doors open at present, Our researchers hone in on the upper echelon of this club, approximately 850 funds. These investment experts command the majority of the hedge fund industry's total capital, and by paying attention to their finest equity investments, Insider Monkey has discovered a few investment strategies that have historically beaten the S&P 500 index. Insider Monkey's flagship short hedge fund strategy beat the S&P 500 short ETFs by around 20 percentage points a year since its inception in March 2017. Our portfolio of short stocks lost 35.3% since February 2017 (through March 3rd) even though the market was up more than 35% during the same period. We just shared a list of 7 short targets in our latest quarterly update .
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Paul Marshall of Marshall Wace[/caption]
We leave no stone unturned when looking for the next great investment idea. For example we recently identified a stock that trades 25% below the net cash on its balance sheet. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences, and go through short-term trade recommendations like this one. We even check out the recommendations of services with hard to believe track records. Our best call in 2020 was shorting the market when S&P 500 was trading at 3150 after realizing the coronavirus pandemic's significance before most investors. Keeping this in mind we're going to take a gander at the key hedge fund action encompassing Suzano S.A. (NYSE:SUZ).
How have hedgies been trading Suzano S.A. (NYSE:SUZ)?
At Q4's end, a total of 4 of the hedge funds tracked by Insider Monkey were long this stock, a change of 0% from the previous quarter. On the other hand, there were a total of 0 hedge funds with a bullish position in SUZ a year ago. So, let's find out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
According to publicly available hedge fund and institutional investor holdings data compiled by Insider Monkey, Renaissance Technologies, founded by Jim Simons, holds the biggest position in Suzano S.A. (NYSE:SUZ). Renaissance Technologies has a $39.2 million position in the stock, comprising less than 0.1%% of its 13F portfolio. The second largest stake is held by AQR Capital Management, led by Cliff Asness, holding a $1 million position; less than 0.1%% of its 13F portfolio is allocated to the company. Other hedge funds and institutional investors that hold long positions include Ken Griffin's Citadel Investment Group, Paul Marshall and Ian Wace's Marshall Wace LLP and . In terms of the portfolio weights assigned to each position Renaissance Technologies allocated the biggest weight to Suzano S.A. (NYSE:SUZ), around 0.03% of its 13F portfolio. AQR Capital Management is also relatively very bullish on the stock, designating 0.0011 percent of its 13F equity portfolio to SUZ.
We view hedge fund activity in the stock unfavorable, but in this case there was only a single hedge fund selling its entire position: Millennium Management. One hedge fund selling its entire position doesn't always imply a bearish intent. Theoretically a hedge fund may decide to sell a promising position in order to invest the proceeds in a more promising idea. However, we don't think this is the case in this case because only one of the 800+ hedge funds tracked by Insider Monkey identified as a viable investment and initiated a position in the stock (that fund was Citadel Investment Group).
Let's also examine hedge fund activity in other stocks - not necessarily in the same industry as Suzano S.A. (NYSE:SUZ) but similarly valued. We will take a look at The AES Corporation (NYSE:AES), BanColombia S.A. (NYSE:CIB), Alliant Energy Corporation (NYSE:LNT), and IDEX Corporation (NYSE:IEX). This group of stocks' market caps are closest to SUZ's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position AES,27,694739,0 CIB,14,214226,3 LNT,28,560221,5 IEX,23,487828,2 Average,23,489254,2.5 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 23 hedge funds with bullish positions and the average amount invested in these stocks was $489 million. That figure was $40 million in SUZ's case. Alliant Energy Corporation (NYSE:LNT) is the most popular stock in this table. On the other hand BanColombia S.A. (NYSE:CIB) is the least popular one with only 14 bullish hedge fund positions. Compared to these stocks Suzano S.A. (NYSE:SUZ) is even less popular than CIB. Hedge funds dodged a bullet by taking a bearish stance towards SUZ. Our calculations showed that the top 20 most popular hedge fund stocks returned 41.3% in 2019 and outperformed the S&P 500 ETF (SPY) by 10.1 percentage points. These stocks lost 22.3% in 2020 through March 16th but managed to beat the market by 3.2 percentage points. Unfortunately SUZ wasn't nearly as popular as these 20 stocks (hedge fund sentiment was very bearish); SUZ investors were disappointed as the stock returned -42.5% during the same time period and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 20 most popular stocks among hedge funds as most of these stocks already outperformed the market so far in Q1.
Disclosure: None. This article was originally published at Insider Monkey.