Here is What Hedge Funds Think About Suburban Propane Partners LP (SPH)

The latest 13F reporting period has come and gone, and Insider Monkey is again at the forefront when it comes to making use of this gold mine of data. We at Insider Monkey have plowed through 821 13F filings that hedge funds and well-known value investors are required to file by the SEC. The 13F filings show the funds’ and investors’ portfolio positions as of March 31st, a week after the market trough. In this article we look at what those investors think of Suburban Propane Partners LP (NYSE:SPH).

Suburban Propane Partners LP (NYSE:SPH) was in 4 hedge funds’ portfolios at the end of the first quarter of 2020. SPH investors should pay attention to a decrease in support from the world’s most elite money managers in recent months. There were 5 hedge funds in our database with SPH holdings at the end of the previous quarter. Our calculations also showed that SPH isn’t among the 30 most popular stocks among hedge funds (click for Q1 rankings and see the video for a quick look at the top 5 stocks).

Video: Watch our video about the top 5 most popular hedge fund stocks.

In the financial world there are a large number of tools investors have at their disposal to grade stocks. A pair of the most under-the-radar tools are hedge fund and insider trading indicators. We have shown that, historically, those who follow the top picks of the best fund managers can outperform the broader indices by a solid amount. Insider Monkey’s monthly stock picks returned 72% since March 2017 and outperformed the S&P 500 ETFs by more than 44 percentage points. Our short strategy outperformed the S&P 500 short ETFs by 20 percentage points annually (see the details here). That’s why we believe hedge fund sentiment is a useful indicator that investors should pay attention to.

David Abrams of Abrams Capital Management

At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, we believe electric vehicles and energy storage are set to become giant markets, and we want to take advantage of the declining lithium prices amid the COVID-19 pandemic. So we are checking out investment opportunities like this one. We interview hedge fund managers and ask them about their best ideas. If you want to find out the best healthcare stock to buy right now, you can watch our latest hedge fund manager interview here. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. Our best call in 2020 was shorting the market when the S&P 500 was trading at 3150 after realizing the coronavirus pandemic’s significance before most investors. Keeping this in mind we’re going to take a gander at the fresh hedge fund action surrounding Suburban Propane Partners LP (NYSE:SPH).

Hedge fund activity in Suburban Propane Partners LP (NYSE:SPH)

At Q1’s end, a total of 4 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -20% from the fourth quarter of 2019. On the other hand, there were a total of 5 hedge funds with a bullish position in SPH a year ago. So, let’s review which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

According to publicly available hedge fund and institutional investor holdings data compiled by Insider Monkey, David Abrams’s Abrams Capital Management has the most valuable position in Suburban Propane Partners LP (NYSE:SPH), worth close to $37.7 million, comprising 1.5% of its total 13F portfolio. The second most bullish fund manager is Levin Capital Strategies, led by John A. Levin, holding a $1.7 million position; the fund has 0.3% of its 13F portfolio invested in the stock. Some other professional money managers that hold long positions contain Peter Rathjens, Bruce Clarke and John Campbell’s Arrowstreet Capital, Ken Griffin’s Citadel Investment Group and Ken Griffin’s Citadel Investment Group. In terms of the portfolio weights assigned to each position Abrams Capital Management allocated the biggest weight to Suburban Propane Partners LP (NYSE:SPH), around 1.48% of its 13F portfolio. Levin Capital Strategies is also relatively very bullish on the stock, designating 0.27 percent of its 13F equity portfolio to SPH.

Judging by the fact that Suburban Propane Partners LP (NYSE:SPH) has faced bearish sentiment from the aggregate hedge fund industry, it’s safe to say that there lies a certain “tier” of fund managers that slashed their entire stakes heading into Q4. Intriguingly, Philippe Laffont’s Coatue Management dropped the biggest position of all the hedgies tracked by Insider Monkey, worth an estimated $0.7 million in stock. James Dondero’s fund, Highland Capital Management, also said goodbye to its stock, about $0.4 million worth. These moves are important to note, as total hedge fund interest fell by 1 funds heading into Q4.

Let’s now review hedge fund activity in other stocks similar to Suburban Propane Partners LP (NYSE:SPH). We will take a look at Piper Sandler Companies (NYSE:PIPR), Varex Imaging Corporation (NASDAQ:VREX), Construction Partners, Inc. (NASDAQ:ROAD), and Cactus, Inc. (NYSE:WHD). This group of stocks’ market valuations resemble SPH’s market valuation.

View table here if you experience formatting issues.

As you can see these stocks had an average of 13.75 hedge funds with bullish positions and the average amount invested in these stocks was $55 million. That figure was $41 million in SPH’s case. Varex Imaging Corporation (NASDAQ:VREX) is the most popular stock in this table. On the other hand Construction Partners, Inc. (NASDAQ:ROAD) is the least popular one with only 6 bullish hedge fund positions. Compared to these stocks Suburban Propane Partners LP (NYSE:SPH) is even less popular than ROAD. Hedge funds dodged a bullet by taking a bearish stance towards SPH. Our calculations showed that the top 10 most popular hedge fund stocks returned 41.4% in 2019 and outperformed the S&P 500 ETF (SPY) by 10.1 percentage points. These stocks gained 8.3% in 2020 through the end of May but managed to beat the market by 13.2 percentage points. Unfortunately SPH wasn’t nearly as popular as these 10 stocks (hedge fund sentiment was very bearish); SPH investors were disappointed as the stock returned 7.7% during the second quarter (through the end of May) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 10 most popular stocks among hedge funds as most of these stocks already outperformed the market so far in 2020.

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