Is Sun Communities Inc (NYSE:SUI) a good place to invest some of your money right now? We can gain invaluable insight to help us answer that question by studying the investment trends of top investors, who employ world-class Ivy League graduates, who are given immense resources and industry contacts to put their financial expertise to work. The top picks of these firms have historically outperformed the market when we account for known risk factors, making them very valuable investment ideas.
Is Sun Communities (SUI) a good stock to buy? Hedge funds were getting more optimistic. The number of long hedge fund bets went up by 1 lately. Sun Communities Inc (NYSE:SUI) was in 31 hedge funds' portfolios at the end of September. The all time high for this statistic is 31. This means the bullish number of hedge fund positions in this stock currently sits at its all time high. Our calculations also showed that SUI isn't among the 30 most popular stocks among hedge funds (click for Q3 rankings and see the video for a quick look at the top 5 stocks). There were 30 hedge funds in our database with SUI positions at the end of the second quarter. Video: Watch our video about the top 5 most popular hedge fund stocks.
To most traders, hedge funds are viewed as underperforming, old investment vehicles of the past. While there are more than 8000 funds trading today, Our experts look at the bigwigs of this group, around 850 funds. These hedge fund managers oversee bulk of the smart money's total capital, and by tracking their finest investments, Insider Monkey has spotted many investment strategies that have historically exceeded Mr. Market. Insider Monkey's flagship short hedge fund strategy beat the S&P 500 short ETFs by around 20 percentage points per annum since its inception in March 2017. Our portfolio of short stocks lost 13% since February 2017 (through November 17th) even though the market was up 65% during the same period. We just shared a list of 6 short targets in our latest quarterly update .
Charles Davidson of Wexford Capital
At Insider Monkey we scour multiple sources to uncover the next great investment idea. For example, Federal Reserve has been creating trillions of dollars electronically to keep the interest rates near zero. We believe this will lead to inflation and boost real estate prices. So, we recommended this real estate stock to our monthly premium newsletter subscribers. We go through lists like the 15 best blue chip stocks to pick the best large-cap stocks to buy. 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 website. Keeping this in mind let's analyze the key hedge fund action surrounding Sun Communities Inc (NYSE:SUI).
Do Hedge Funds Think SUI Is A Good Stock To Buy Now?
Heading into the fourth quarter of 2020, a total of 31 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 3% from one quarter earlier. Below, you can check out the change in hedge fund sentiment towards SUI over the last 21 quarters. With the smart money's positions undergoing their usual ebb and flow, there exists an "upper tier" of notable hedge fund managers who were increasing their holdings significantly (or already accumulated large positions).
Among these funds, Citadel Investment Group held the most valuable stake in Sun Communities Inc (NYSE:SUI), which was worth $83.1 million at the end of the third quarter. On the second spot was Waratah Capital Advisors which amassed $70.1 million worth of shares. Echo Street Capital Management, Millennium Management, and Balyasny Asset Management 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 Waratah Capital Advisors allocated the biggest weight to Sun Communities Inc (NYSE:SUI), around 7.48% of its 13F portfolio. Waterfront Capital Partners is also relatively very bullish on the stock, setting aside 2.58 percent of its 13F equity portfolio to SUI.
Now, key hedge funds have jumped into Sun Communities Inc (NYSE:SUI) headfirst. Waratah Capital Advisors, managed by Brad Dunkley and Blair Levinsky, initiated the most outsized position in Sun Communities Inc (NYSE:SUI). Waratah Capital Advisors had $70.1 million invested in the company at the end of the quarter. D. E. Shaw's D E Shaw also made a $10.5 million investment in the stock during the quarter. The other funds with new positions in the stock are Mark Coe's Intrinsic Edge Capital, Charles Davidson and Joseph Jacobs's Wexford Capital, and Jaime Sterne's Skye Global Management.
Let's go over hedge fund activity in other stocks - not necessarily in the same industry as Sun Communities Inc (NYSE:SUI) but similarly valued. These stocks are Extra Space Storage, Inc. (NYSE:EXR), BioMarin Pharmaceutical Inc. (NASDAQ:BMRN), C.H. Robinson Worldwide, Inc. (NASDAQ:CHRW), Cardinal Health, Inc. (NYSE:CAH), IDEX Corporation (NYSE:IEX), Baker Hughes Company (NYSE:BKR), and Genuine Parts Company (NYSE:GPC). All of these stocks' market caps are closest to SUI's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position EXR,27,280182,0 BMRN,44,1572770,-1 CHRW,22,531478,-6 CAH,45,1006225,-4 IEX,26,593094,-5 BKR,28,466167,1 GPC,23,170601,3 Average,30.7,660074,-1.7 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 30.7 hedge funds with bullish positions and the average amount invested in these stocks was $660 million. That figure was $351 million in SUI's case. Cardinal Health, Inc. (NYSE:CAH) is the most popular stock in this table. On the other hand C.H. Robinson Worldwide, Inc. (NASDAQ:CHRW) is the least popular one with only 22 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 55.6. 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. This is a slightly positive signal but we'd rather spend our time researching stocks that hedge funds are piling on. Our calculations showed that top 20 most popular stocks among hedge funds returned 41.3% in 2019 and outperformed the S&P 500 ETF (SPY) by 10 percentage points. These stocks gained 33.3% in 2020 through December 18th and beat the market again by 16.4 percentage points. Unfortunately SUI wasn't nearly as popular as these 20 stocks and hedge funds that were betting on SUI were disappointed as the stock returned 4.3% since the end of September (through 12/18) 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 many of these stocks already outperformed the market so far this year.
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Disclosure: None. This article was originally published at Insider Monkey.