Is SU Stock A Buy or Sell?

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 887 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 December 31st. In this article we look at what those investors think of Suncor Energy Inc. (NYSE:SU).

Is SU stock a buy? Suncor Energy Inc. (NYSE:SU) was in 25 hedge funds’ portfolios at the end of December. The all time high for this statistic is 41. SU has experienced an increase in hedge fund sentiment recently. There were 22 hedge funds in our database with SU holdings at the end of September. Our calculations also showed that SU isn’t among the 30 most popular stocks among hedge funds (click for Q4 rankings).

So, why do we pay attention to hedge fund sentiment before making any investment decisions? Our research has shown that hedge funds’ small-cap stock picks managed to beat the market by double digits annually between 1999 and 2016, but the margin of outperformance has been declining in recent years. Nevertheless, we were still able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by more than 124 percentage points since March 2017 (see the details here).

Charles Davidson of Wexford Capital

At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, the CBD market is growing at a 33% annualized rate, so we are taking a closer look at this under-the-radar hemp stock. We go through lists like the 10 best biotech stocks under $10 to identify the next stock with 10x upside potential. Even though we recommend positions in only a tiny fraction of the companies we analyze, we check out as many stocks as we can. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. You can subscribe to our free daily newsletter on our website. Keeping this in mind let’s take a glance at the new hedge fund action surrounding Suncor Energy Inc. (NYSE:SU).

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

At the end of the fourth quarter, a total of 25 of the hedge funds tracked by Insider Monkey were long this stock, a change of 14% from one quarter earlier. Below, you can check out the change in hedge fund sentiment towards SU over the last 22 quarters. With hedgies’ capital changing hands, there exists a few key hedge fund managers who were increasing their holdings substantially (or already accumulated large positions).

More specifically, Berkshire Hathaway was the largest shareholder of Suncor Energy Inc. (NYSE:SU), with a stake worth $232.4 million reported as of the end of December. Trailing Berkshire Hathaway was Lyrical Asset Management, which amassed a stake valued at $157.3 million. D E Shaw, Point72 Asset Management, and Locust Wood Capital Advisers 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 Lyrical Asset Management allocated the biggest weight to Suncor Energy Inc. (NYSE:SU), around 2.17% of its 13F portfolio. Heronetta Management is also relatively very bullish on the stock, dishing out 2.17 percent of its 13F equity portfolio to SU.

Consequently, specific money managers have been driving this bullishness. Balyasny Asset Management, managed by Dmitry Balyasny, assembled the most outsized position in Suncor Energy Inc. (NYSE:SU). Balyasny Asset Management had $15.5 million invested in the company at the end of the quarter. Matt Smith’s Deep Basin Capital also made a $14.5 million investment in the stock during the quarter. The other funds with new positions in the stock are Charles Davidson and Joseph Jacobs’s Wexford Capital, Paul Marshall and Ian Wace’s Marshall Wace LLP, and Ryan Tolkin (CIO)’s Schonfeld Strategic Advisors.

Let’s go over hedge fund activity in other stocks similar to Suncor Energy Inc. (NYSE:SU). These stocks are TELUS Corporation (NYSE:TU), McCormick & Company, Incorporated (NYSE:MKC), The Clorox Company (NYSE:CLX), Dollar Tree, Inc. (NASDAQ:DLTR), Skyworks Solutions Inc (NASDAQ:SWKS), First Republic Bank (NYSE:FRC), and Hormel Foods Corporation (NYSE:HRL). This group of stocks’ market valuations are closest to SU’s market valuation.

View table here if you experience formatting issues.

As you can see these stocks had an average of 35.4 hedge funds with bullish positions and the average amount invested in these stocks was $1179 million. That figure was $686 million in SU’s case. Dollar Tree, Inc. (NASDAQ:DLTR) is the most popular stock in this table. On the other hand TELUS Corporation (NYSE:TU) is the least popular one with only 14 bullish hedge fund positions. Suncor Energy Inc. (NYSE:SU) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for SU is 40.4. 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. Our calculations showed that top 30 most popular stocks among hedge funds returned 81.2% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 26 percentage points. These stocks gained 12.3% in 2021 through April 19th and still beat the market by 0.9 percentage points. A small number of hedge funds were also right about betting on SU as the stock returned 25.5% since the end of the fourth quarter (through 4/19) and outperformed the market by an even larger margin.

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