Hedge Funds Are Betting On Sonic Corporation (SONC)

The 700+ hedge funds and money managers tracked by Insider Monkey have already compiled and submitted their 13F filings for the third quarter, which unveil their equity positions as of September 30. We went through these filings, fixed typos and other more significant errors and identified the changes in hedge fund positions. Our extensive review of these public filings is finally over, so this article is set to reveal the smart money sentiment towards Sonic Corporation (NASDAQ:SONC).

Is Sonic Corporation (NASDAQ:SONC) a bargain? Investors who are in the know are getting more bullish. The number of long hedge fund bets advanced by 4 lately. 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 Universal Corp (NYSE:UVV), seacube container leasing ltd (NYSE:BOX), and EP Energy Corp (NYSE:EPE) to gather more data points.

At Insider Monkey, we’ve developed an investment strategy that has delivered market-beating returns over the past 12 months. Our strategy identifies the 100 best-performing funds of the previous quarter from among the collection of 700+ successful funds that we track in our database, which we accomplish using our returns methodology. We then study the portfolios of those 100 funds using the latest 13F data to uncover the 30 most popular mid-cap stocks (market caps of between $1 billion and $10 billion) among them to hold until the next filing period. This strategy delivered 18% gains over the past 12 months, more than doubling the 8% returns enjoyed by the S&P 500 ETFs.

koss13/Shutterstock.com

Now, we’re going to analyze the new action surrounding Sonic Corporation (NASDAQ:SONC).

How have hedgies been trading Sonic Corporation (NASDAQ:SONC)?

At the end of the third quarter, a total of 22 of the hedge funds tracked by Insider Monkey held long positions in this stock, a jump of 22% from the second quarter of 2016. With hedgies’ sentiment swirling, there exists a select group of noteworthy hedge fund managers who were upping their holdings substantially (or already accumulated large positions).

When looking at the institutional investors followed by Insider Monkey, Mason Hawkins’s Southeastern Asset Management has the number one position in Sonic Corporation (NASDAQ:SONC), worth close to $100.1 million, amounting to 1% of its total 13F portfolio. On Southeastern Asset Management’s heels is Chilton Investment Company, led by Richard Chilton, holding a $98.8 million position; 3.9% of its 13F portfolio is allocated to the stock. Some other professional money managers that are bullish contain Israel Englander’s Millennium Management, Anand Parekh’s Alyeska Investment Group and Paul Marshall and Ian Wace’s Marshall Wace LLP.

As industrywide interest jumped, key hedge funds have jumped into Sonic Corporation (NASDAQ:SONC) headfirst. Mason Hawkins’ Southeastern Asset Management assembled the most outsized position in Sonic Corporation (NASDAQ:SONC), followed by Anand Parekh’s Alyeska Investment Group, which initiated a $17.1 million position during the quarter. The other funds with new positions in the stock are Matthew Knauer and Mina Faltas’s Nokota Management, Jim Simons’s Renaissance Technologies, and Richard McGuire’s Marcato Capital Management.

Let’s now review hedge fund activity in other stocks – not necessarily in the same industry as Sonic Corporation (NASDAQ:SONC) but similarly valued. We will take a look at Universal Corp (NYSE:UVV), seacube container leasing ltd (NYSE:BOX), EP Energy Corp (NYSE:EPE), and United Community Banks Inc (NASDAQ:UCBI). This group of stocks’ market caps are similar to SONC’s market cap.

As you can see these stocks had an average of 15 hedge funds with bullish positions and the average amount invested in these stocks was $95 million. That figure was $325 million in SONC’s case. seacube container leasing ltd (NYSE:BOX) is the most popular stock in this table. On the other hand United Community Banks Inc (NASDAQ:UCBI) is the least popular one with only 12 bullish hedge fund positions. Compared to these stocks Sonic Corporation (NASDAQ:SONC) is more popular among hedge funds. Considering that hedge funds are fond of this stock in relation to its market cap peers, it may be a good idea to analyze it in detail and potentially include it in your portfolio.

Disclosure: none.