Here is What Hedge Funds Think About Sun Communities Inc (SUI)

Although the masses and most of the financial media blame hedge funds for their exorbitant fee structure and disappointing performance, these investors have proved to have great stock picking abilities over the years (that’s why their assets under management continue to swell). We believe hedge fund sentiment should serve as a crucial tool of an individual investor’s stock selection process, as it may offer great insights of how the brightest minds of the finance industry feel about specific stocks. After all, these people have access to the smartest analysts and expensive data/information sources that individual investors can’t match. So should one consider investing in Sun Communities Inc (NYSE:SUI)? The smart money sentiment can provide an answer to this question.

Sun Communities Inc (NYSE:SUI) has experienced an increase in hedge fund sentiment in recent months. Sun Communities Inc (NYSE:SUI) was in 33 hedge funds’ portfolios at the end of September. The all time high for this statistic is 35. There were 30 hedge funds in our database with SUI positions at the end of the second quarter. Our calculations also showed that SUI isn’t among the 30 most popular stocks among hedge funds (click for Q3 rankings).

Joel Greenblatt of Gotham Asset Management

At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, lithium prices have more than doubled over the past year, so we go through lists like the 10 best EV stocks to pick the next Tesla that will deliver a 10x return. Even though we recommend positions in only a tiny fraction of the companies we analyze, we check out as many stocks as we can. Keeping this in mind let’s check out the new hedge fund action regarding Sun Communities Inc (NYSE:SUI).

Do Hedge Funds Think SUI Is A Good Stock To Buy Now?

At Q3’s end, a total of 33 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 10% from the second quarter of 2021. Below, you can check out the change in hedge fund sentiment towards SUI over the last 25 quarters. So, let’s check out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

More specifically, Echo Street Capital Management was the largest shareholder of Sun Communities Inc (NYSE:SUI), with a stake worth $187.4 million reported as of the end of September. Trailing Echo Street Capital Management was Millennium Management, which amassed a stake valued at $138.6 million. Waratah Capital Advisors, Citadel Investment Group, and Waterfront Capital Partners 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 SW Investment Management allocated the biggest weight to Sun Communities Inc (NYSE:SUI), around 5.89% of its 13F portfolio. Waterfront Capital Partners is also relatively very bullish on the stock, designating 3.97 percent of its 13F equity portfolio to SUI.

With a general bullishness amongst the heavyweights, some big names were breaking ground themselves. Marshall Wace LLP, managed by Paul Marshall and Ian Wace, initiated the most outsized position in Sun Communities Inc (NYSE:SUI). Marshall Wace LLP had $12.4 million invested in the company at the end of the quarter. Paul Tudor Jones’s Tudor Investment Corp also made a $3.1 million investment in the stock during the quarter. The following funds were also among the new SUI investors: Greg Eisner’s Engineers Gate Manager, Mika Toikka’s AlphaCrest Capital Management, and Joel Greenblatt’s Gotham Asset Management.

Let’s now review hedge fund activity in other stocks – not necessarily in the same industry as Sun Communities Inc (NYSE:SUI) but similarly valued. These stocks are Martin Marietta Materials, Inc. (NYSE:MLM), Fox Corporation (NASDAQ:FOX), Edison International (NYSE:EIX), Fortis Inc. (NYSE:FTS), ICON Public Limited Company (NASDAQ:ICLR), POSCO (NYSE:PKX), and CarMax Inc (NYSE:KMX). This group of stocks’ market values are closest to SUI’s market value.

View table here if you experience formatting issues.

As you can see these stocks had an average of 25.6 hedge funds with bullish positions and the average amount invested in these stocks was $1038 million. That figure was $795 million in SUI’s case. Martin Marietta Materials, Inc. (NYSE:MLM) is the most popular stock in this table. On the other hand Fortis Inc. (NYSE:FTS) is the least popular one with only 5 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 74.1. 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 5 most popular stocks among hedge funds returned 95.8% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 40 percentage points. These stocks gained 28.6% in 2021 through November 30th and beat the market again by 5.6 percentage points. Unfortunately SUI wasn’t nearly as popular as these 5 stocks and hedge funds that were betting on SUI were disappointed as the stock returned 1.9% since the end of September (through 11/30) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 5 most popular stocks among hedge funds as many of these stocks already outperformed the market since 2019.

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

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