Like everyone else, elite investors make mistakes. Some of their top consensus picks, such as Amazon, Facebook and Alibaba, have not done well in Q4 due to various reasons. Nevertheless, the data show elite investors’ consensus picks have done well on average over the long-term. The top 20 stocks among hedge funds beat the S&P 500 Index ETF by more than 6 percentage points so far this year. Because their consensus picks have done well, we pay attention to what elite funds think before doing extensive research on a stock. In this article, we take a closer look at Suncor Energy Inc. (NYSE:SU) from the perspective of those elite funds.
Is Suncor Energy Inc. (NYSE:SU) a buy, sell, or hold? Money managers are buying. The number of bullish hedge fund bets rose by 3 in recent months. Our calculations also showed that su isn’t among the 30 most popular stocks among hedge funds. SU was in 33 hedge funds’ portfolios at the end of the first quarter of 2019. There were 30 hedge funds in our database with SU positions at the end of the previous quarter.
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.
We’re going to review the fresh hedge fund action encompassing Suncor Energy Inc. (NYSE:SU).
How are hedge funds trading Suncor Energy Inc. (NYSE:SU)?
At the end of the first quarter, a total of 33 of the hedge funds tracked by Insider Monkey were long this stock, a change of 10% from the fourth quarter of 2018. On the other hand, there were a total of 23 hedge funds with a bullish position in SU a year ago. So, let’s check out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
When looking at the institutional investors followed by Insider Monkey, Warren Buffett’s Berkshire Hathaway has the largest position in Suncor Energy Inc. (NYSE:SU), worth close to $348.9 million, comprising 0.2% of its total 13F portfolio. The second most bullish fund manager is Millennium Management, led by Israel Englander, holding a $115.1 million position; 0.2% of its 13F portfolio is allocated to the stock. Other members of the smart money that are bullish consist of Cliff Asness’s AQR Capital Management, Ken Griffin’s Citadel Investment Group and Brian Ashford-Russell and Tim Woolley’s Polar Capital.
Consequently, key hedge funds were breaking ground themselves. Centenus Global Management, managed by Sara Nainzadeh, created the largest position in Suncor Energy Inc. (NYSE:SU). Centenus Global Management had $3.7 million invested in the company at the end of the quarter. Brad Dunkley and Blair Levinsky’s Waratah Capital Advisors also made a $1.9 million investment in the stock during the quarter. The following funds were also among the new SU investors: Michael Gelband’s ExodusPoint Capital, Minhua Zhang’s Weld Capital Management, and Paul Marshall and Ian Wace’s Marshall Wace LLP.
Let’s now take a look at hedge fund activity in other stocks – not necessarily in the same industry as Suncor Energy Inc. (NYSE:SU) but similarly valued. We will take a look at Ecolab Inc. (NYSE:ECL), Deere & Company (NYSE:DE), Vodafone Group Plc (NASDAQ:VOD), and Norfolk Southern Corp. (NYSE:NSC). This group of stocks’ market valuations resemble SU’s market valuation.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| ECL | 27 | 1965653 | 0 |
| DE | 31 | 1412560 | -16 |
| VOD | 18 | 438299 | 0 |
| NSC | 47 | 1869998 | 0 |
| Average | 30.75 | 1421628 | -4 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 30.75 hedge funds with bullish positions and the average amount invested in these stocks was $1422 million. That figure was $1012 million in SU’s case. Norfolk Southern Corp. (NYSE:NSC) is the most popular stock in this table. On the other hand Vodafone Group Plc (NASDAQ:VOD) is the least popular one with only 18 bullish hedge fund positions. Suncor Energy Inc. (NYSE:SU) is not the most popular stock in this group but hedge fund interest is still above average. 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 20 most popular stocks among hedge funds returned 1.9% in Q2 through May 30th and outperformed the S&P 500 ETF (SPY) by more than 3 percentage points. Unfortunately SU wasn’t nearly as popular as these 20 stocks and hedge funds that were betting on SU were disappointed as the stock returned -4.3% 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 so far in Q2.
Disclosure: None. This article was originally published at Insider Monkey.
