After several tireless days we have finished crunching the numbers from nearly 750 13F filings issued by the elite hedge funds and other investment firms that we track at Insider Monkey, which disclosed those firms’ equity portfolios as of March 31. The results of that effort will be put on display in this article, as we share valuable insight into the smart money sentiment towards Summit Materials Inc (NYSE:SUM).
Summit Materials Inc (NYSE:SUM) has experienced an increase in support from the world’s most elite money managers lately. Our calculations also showed that SUM isn’t among the 30 most popular stocks among hedge funds.
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 take a look at the latest hedge fund action encompassing Summit Materials Inc (NYSE:SUM).
How have hedgies been trading Summit Materials Inc (NYSE:SUM)?
Heading into the second quarter of 2019, a total of 22 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 10% from the fourth quarter of 2018. By comparison, 30 hedge funds held shares or bullish call options in SUM a year ago. With hedgies’ capital changing hands, there exists a select group of noteworthy hedge fund managers who were upping their stakes substantially (or already accumulated large positions).
More specifically, Southeastern Asset Management was the largest shareholder of Summit Materials Inc (NYSE:SUM), with a stake worth $203.5 million reported as of the end of March. Trailing Southeastern Asset Management was Adage Capital Management, which amassed a stake valued at $110 million. GMT Capital, Wallace R. Weitz & Co., and Scopus Asset Management were also very fond of the stock, giving the stock large weights in their portfolios.
As industrywide interest jumped, specific money managers have been driving this bullishness. Scopus Asset Management, managed by Alexander Mitchell, created the largest position in Summit Materials Inc (NYSE:SUM). Scopus Asset Management had $27.2 million invested in the company at the end of the quarter. Louis Bacon’s Moore Global Investments also initiated a $3.2 million position during the quarter. The following funds were also among the new SUM investors: Noam Gottesman’s GLG Partners, Anand Parekh’s Alyeska Investment Group, and Michael Gelband’s ExodusPoint Capital.
Let’s go over hedge fund activity in other stocks – not necessarily in the same industry as Summit Materials Inc (NYSE:SUM) but similarly valued. We will take a look at SJW Group (NYSE:SJW), Tower Semiconductor Ltd. (NASDAQ:TSEM), Cannae Holdings, Inc. (NYSE:CNNE), and Cubic Corporation (NYSE:CUB). This group of stocks’ market values resemble SUM’s market value.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| SJW | 15 | 172638 | -5 |
| TSEM | 12 | 258420 | -4 |
| CNNE | 24 | 256097 | 1 |
| CUB | 15 | 72613 | -7 |
| Average | 16.5 | 189942 | -3.75 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 16.5 hedge funds with bullish positions and the average amount invested in these stocks was $190 million. That figure was $480 million in SUM’s case. Cannae Holdings, Inc. (NYSE:CNNE) is the most popular stock in this table. On the other hand Tower Semiconductor Ltd. (NASDAQ:TSEM) is the least popular one with only 12 bullish hedge fund positions. Summit Materials Inc (NYSE:SUM) 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 SUM wasn’t nearly as popular as these 20 stocks and hedge funds that were betting on SUM were disappointed as the stock returned -10.3% 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.
