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Is Suzano S.A. (NYSE:SUZ) 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 Suzano S.A. (NYSE:SUZ) a splendid investment today? The smart money was in a bullish mood. The number of long hedge fund positions rose by 1 lately. Suzano S.A. (NYSE:SUZ) was in 4 hedge funds' portfolios at the end of September. The all time high for this statistics is 4. This means the bullish number of hedge fund positions in this stock currently sits at its all time high. Our calculations also showed that SUZ 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 3 hedge funds in our database with SUZ holdings at the end of June.
Video: Watch our video about the top 5 most popular hedge fund stocks.
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 66 percentage points since March 2017 (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 13% through November 17th. That's why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
Peter Rathjens of Arrowstreet 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 10 most profitable companies in the world 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. Now we're going to take a look at the fresh hedge fund action regarding Suzano S.A. (NYSE:SUZ).
What have hedge funds been doing with Suzano S.A. (NYSE:SUZ)?
Heading into the fourth quarter of 2020, a total of 4 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 33% from the previous quarter. By comparison, 4 hedge funds held shares or bullish call options in SUZ a year ago. With hedge funds' sentiment swirling, there exists a select group of noteworthy hedge fund managers who were adding to their holdings significantly (or already accumulated large positions).
Of the funds tracked by Insider Monkey, Renaissance Technologies, holds the largest position in Suzano S.A. (NYSE:SUZ). Renaissance Technologies has a $31.8 million position in the stock, comprising less than 0.1%% of its 13F portfolio. Coming in second is Peter Rathjens, Bruce Clarke and John Campbell of Arrowstreet Capital, with a $1.8 million position; the fund has less than 0.1%% of its 13F portfolio invested in the stock. Remaining professional money managers that are bullish contain Michael Gelband's ExodusPoint Capital, Cliff Asness's AQR Capital Management 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. ExodusPoint Capital is also relatively very bullish on the stock, setting aside 0.02 percent of its 13F equity portfolio to SUZ.
Consequently, some big names have been driving this bullishness. ExodusPoint Capital, managed by Michael Gelband, established the most valuable position in Suzano S.A. (NYSE:SUZ). ExodusPoint Capital had $1.1 million invested in the company at the end of the quarter.
Let's also examine hedge fund activity in other stocks similar to Suzano S.A. (NYSE:SUZ). These stocks are Erie Indemnity Company (NASDAQ:ERIE), Icahn Enterprises LP (NASDAQ:IEP), AngloGold Ashanti Limited (NYSE:AU), Shinhan Financial Group Co., Ltd. (NYSE:SHG), Lumen Technologies, Inc. (NYSE:LUMN), W.R. Berkley Corporation (NYSE:WRB), and Gold Fields Limited (NYSE:GFI). This group of stocks' market values match SUZ's market value.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position ERIE,14,58619,0 IEP,4,10576402,1 AU,17,586074,1 SHG,4,18777,2 LUMN,31,762836,1 WRB,28,382157,1 GFI,15,508773,0 Average,16.1,1841948,0.9 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 16.1 hedge funds with bullish positions and the average amount invested in these stocks was $1842 million. That figure was $35 million in SUZ's case. Lumen Technologies, Inc. (NYSE:LUMN) is the most popular stock in this table. On the other hand Icahn Enterprises LP (NASDAQ:IEP) is the least popular one with only 4 bullish hedge fund positions. Compared to these stocks Suzano S.A. (NYSE:SUZ) is even less popular than IEP. Our overall hedge fund sentiment score for SUZ is 36. 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. Hedge funds clearly dropped the ball on SUZ as the stock delivered strong returns, though hedge funds' consensus picks still generated respectable returns. 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 30.7% in 2020 through November 27th and still beat the market by 16.1 percentage points. A small number of hedge funds were also right about betting on SUZ as the stock returned 26.2% since Q3 (through November 27th) and outperformed the market by an even larger margin.
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Disclosure: None. This article was originally published at Insider Monkey.