Is Superior Industries International Inc. (NYSE:SUP) a good bet right now? We like to analyze hedge fund sentiment before doing days of in-depth research. We do so because hedge funds and other elite investors have numerous Ivy League graduates, expert network advisers, and supply chain tipsters working or consulting for them. There is not a shortage of news stories covering failed hedge fund investments and it is a fact that hedge funds' picks don't beat the market 100% of the time, but their consensus picks have historically done very well and have outperformed the market after adjusting for risk.
Superior Industries International Inc. (NYSE:SUP) investors should pay attention to a decrease in support from the world's most elite money managers of late. Our calculations also showed that SUP isn't among the 30 most popular stocks among hedge funds.
Hedge funds' reputation as shrewd investors has been tarnished in the last decade as their hedged returns couldn't keep up with the unhedged returns of the market indices. Our research has shown that hedge funds' large-cap stock picks indeed failed to beat the market between 1999 and 2016. However, we were able to identify in advance a select group of hedge fund holdings that outperformed the market by 40 percentage points since May 2014 through May 30, 2019 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that'll significantly underperform the market. We have been tracking and sharing the list of these stocks since February 2017 and they lost 30.9% through May 30, 2019. That's why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
[caption id="attachment_375529" align="aligncenter" width="450"] Mario Gabelli of GAMCO Investors[/caption]
We're going to go over the new hedge fund action encompassing Superior Industries International Inc. (NYSE:SUP).
What does smart money think about Superior Industries International Inc. (NYSE:SUP)?
Heading into the second quarter of 2019, a total of 12 of the hedge funds tracked by Insider Monkey were long this stock, a change of -20% from the previous quarter. The graph below displays the number of hedge funds with bullish position in SUP over the last 15 quarters. With hedgies' sentiment swirling, there exists a few notable hedge fund managers who were upping their holdings significantly (or already accumulated large positions).
According to publicly available hedge fund and institutional investor holdings data compiled by Insider Monkey, DC Capital Partners, managed by Douglas Dethy, holds the most valuable position in Superior Industries International Inc. (NYSE:SUP). DC Capital Partners has a $5.7 million position in the stock, comprising 4.2% of its 13F portfolio. The second most bullish fund manager is GAMCO Investors, managed by Mario Gabelli, which holds a $4.2 million position; less than 0.1%% of its 13F portfolio is allocated to the company. Other hedge funds and institutional investors with similar optimism include D. E. Shaw's D E Shaw, John Overdeck and David Siegel's Two Sigma Advisors and Mike Vranos's Ellington.
Due to the fact that Superior Industries International Inc. (NYSE:SUP) has faced bearish sentiment from the aggregate hedge fund industry, we can see that there is a sect of hedgies that slashed their full holdings by the end of the third quarter. It's worth mentioning that Jim Simons's Renaissance Technologies sold off the biggest position of the "upper crust" of funds monitored by Insider Monkey, worth about $1.4 million in call options, and Israel Englander's Millennium Management was right behind this move, as the fund dropped about $0.7 million worth. These transactions are important to note, as aggregate hedge fund interest was cut by 3 funds by the end of the third quarter.
Let's now take a look at hedge fund activity in other stocks similar to Superior Industries International Inc. (NYSE:SUP). We will take a look at RealNetworks Inc (NASDAQ:RNWK), Corvus Pharmaceuticals, Inc. (NASDAQ:CRVS), County Bancorp, Inc. (NASDAQ:ICBK), and Castle Brands Inc (NYSE:ROX). This group of stocks' market valuations resemble SUP's market valuation.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position RNWK,10,35879,3 CRVS,7,38492,-2 ICBK,3,4881,1 ROX,4,1001,0 Average,6,20063,0.5 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 6 hedge funds with bullish positions and the average amount invested in these stocks was $20 million. That figure was $12 million in SUP's case. RealNetworks Inc (NASDAQ:RNWK) is the most popular stock in this table. On the other hand County Bancorp, Inc. (NASDAQ:ICBK) is the least popular one with only 3 bullish hedge fund positions. Compared to these stocks Superior Industries International Inc. (NYSE:SUP) is more popular among hedge funds. Our calculations showed that top 20 most popular stocks among hedge funds returned 6.2% in Q2 through June 19th and outperformed the S&P 500 ETF (SPY) by nearly 3 percentage points. Unfortunately SUP wasn't nearly as popular as these 20 stocks and hedge funds that were betting on SUP were disappointed as the stock returned -25.3% during the same 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 13 of these stocks already outperformed the market in Q2.
Disclosure: None. This article was originally published at Insider Monkey.