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Here is What Hedge Funds Think About Suncor Energy Inc. (SU)

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Insider Monkey has processed numerous 13F filings of hedge funds and successful value investors to create an extensive database of hedge fund holdings. The 13F filings show the hedge funds' and successful investors' positions as of the end of the fourth quarter. You can find articles about an individual hedge fund's trades on numerous financial news websites. However, in this article we will take a look at their collective moves over the last 6 years and analyze what the smart money thinks of Suncor Energy Inc. (NYSE:SU) based on that data.

Is Suncor Energy Inc. (NYSE:SU) a healthy stock for your portfolio? Prominent investors were getting more bullish. The number of bullish hedge fund bets inched up by 8 lately. Suncor Energy Inc. (NYSE:SU) was in 33 hedge funds' portfolios at the end of the first quarter of 2021. The all time high for this statistic is 41. Our calculations also showed that SU isn't among the 30 most popular stocks among hedge funds (click for Q1 rankings). There were 25 hedge funds in our database with SU holdings at the end of December.

Why do we pay any attention at all to hedge fund sentiment? Our research has shown that a select group of hedge fund holdings outperformed the S&P 500 ETFs by 115 percentage points since March 2017 (see the details here). That's why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.

Billionaire Dan Loeb's Top 10 Stock Picks
Billionaire Dan Loeb's Top 10 Stock Picks

Dan Loeb of Third Point

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. Keeping this in mind we're going to take a look at the recent hedge fund action encompassing Suncor Energy Inc. (NYSE:SU).

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

At first quarter's end, a total of 33 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 32% from the previous quarter. Below, you can check out the change in hedge fund sentiment towards SU over the last 23 quarters. So, let's check out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

More specifically, Lyrical Asset Management was the largest shareholder of Suncor Energy Inc. (NYSE:SU), with a stake worth $216.5 million reported as of the end of March. Trailing Lyrical Asset Management was D E Shaw, which amassed a stake valued at $182.2 million. Third Point, Marshall Wace LLP, and Holocene Advisors 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 NewGen Asset Management allocated the biggest weight to Suncor Energy Inc. (NYSE:SU), around 9.94% of its 13F portfolio. NewGen Asset Management is also relatively very bullish on the stock, earmarking 5.62 percent of its 13F equity portfolio to SU.

Consequently, specific money managers were leading the bulls' herd. Third Point, managed by Dan Loeb, created the biggest position in Suncor Energy Inc. (NYSE:SU). Third Point had $125.4 million invested in the company at the end of the quarter. Brandon Haley's Holocene Advisors also initiated a $70.8 million position during the quarter. The following funds were also among the new SU investors: Peter Rathjens, Bruce Clarke and John Campbell's Arrowstreet Capital, David Dattels's NewGen Asset Management, and David Dattels's NewGen Asset Management.

Let's now take a look at hedge fund activity in other stocks similar to Suncor Energy Inc. (NYSE:SU). We will take a look at BeiGene, Ltd. (NASDAQ:BGNE), Archer Daniels Midland Company (NYSE:ADM), Motorola Solutions Inc (NYSE:MSI), Republic Services, Inc. (NYSE:RSG), Companhia Paranaense de Energia - COPEL (NYSE:ELP), ArcelorMittal (NYSE:MT), and Palo Alto Networks Inc (NYSE:PANW). This group of stocks' market caps resemble SU's market cap.

[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position BGNE,19,6242377,-2 ADM,34,696043,-1 MSI,29,1000522,-6 RSG,36,1073744,0 ELP,5,36122,-4 MT,21,709788,3 PANW,64,4015196,3 Average,29.7,1967685,-1 [/table]

View table here if you experience formatting issues.

As you can see these stocks had an average of 29.7 hedge funds with bullish positions and the average amount invested in these stocks was $1968 million. That figure was $1048 million in SU's case. Palo Alto Networks Inc (NYSE:PANW) is the most popular stock in this table. On the other hand Companhia Paranaense de Energia - COPEL (NYSE:ELP) is the least popular one with only 5 bullish hedge fund positions. Suncor Energy Inc. (NYSE:SU) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for SU is 57.9. 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 22.8% in 2021 through July 2nd and still beat the market by 6 percentage points. Hedge funds were also right about betting on SU, though not to the same extent, as the stock returned 15.3% since Q1 (through July 2nd) and outperformed the market as well.

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