Is Suburban Propane Partners LP (NYSE:SPH) a good bet right now? We like to analyze hedge fund sentiment before conducting days of in-depth research. We do so because hedge funds and other elite investors have numerous Ivy League graduates, expert network advisers, and supply chain tipsters working or consulting for them. There is not a shortage of news stories covering failed hedge fund investments and it is a fact that hedge funds’ picks don’t beat the market 100% of the time, but their consensus picks have historically done very well and have outperformed the market after adjusting for risk.
Suburban Propane Partners LP (NYSE:SPH) was in 4 hedge funds’ portfolios at the end of the second quarter of 2019. SPH shareholders have witnessed a decrease in hedge fund sentiment lately. There were 5 hedge funds in our database with SPH positions at the end of the previous quarter. Our calculations also showed that SPH isn’t among the 30 most popular stocks among hedge funds (see the video below).
Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.
At the moment there are a large number of metrics shareholders use to value publicly traded companies. Two of the less known metrics are hedge fund and insider trading signals. Our researchers have shown that, historically, those who follow the best picks of the best money managers can outclass the S&P 500 by a very impressive amount (see the details here).
Unlike former hedge manager, Dr. Steve Sjuggerud, who is convinced Dow will soar past 40000, our long-short investment strategy doesn’t rely on bull markets to deliver double digit returns. We only rely on hedge fund buy/sell signals. Let’s check out the recent hedge fund action regarding Suburban Propane Partners LP (NYSE:SPH).
How are hedge funds trading Suburban Propane Partners LP (NYSE:SPH)?
Heading into the third quarter of 2019, a total of 4 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -20% from the first quarter of 2019. The graph below displays the number of hedge funds with bullish position in SPH over the last 16 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.
According to Insider Monkey’s hedge fund database, Abrams Capital Management, managed by David Abrams, holds the most valuable position in Suburban Propane Partners LP (NYSE:SPH). Abrams Capital Management has a $72.6 million position in the stock, comprising 2% of its 13F portfolio. On Abrams Capital Management’s heels is Arrowstreet Capital, managed by Peter Rathjens, Bruce Clarke and John Campbell, which holds a $19.3 million position; the fund has less than 0.1%% of its 13F portfolio invested in the stock. Other hedge funds and institutional investors that are bullish encompass Renaissance Technologies, James Dondero’s Highland Capital Management and Ken Griffin’s Citadel Investment Group.
We view hedge fund activity in the stock unfavorable, but in this case there was only a single hedge fund selling its entire position: Marshall Wace LLP. One hedge fund selling its entire position doesn’t always imply a bearish intent. Theoretically a hedge fund may decide to sell a promising position in order to invest the proceeds in a more promising idea. However, we don’t think this is the case in this case because none of the 750+ hedge funds tracked by Insider Monkey identified SPH as a viable investment and initiated a position in the stock.
Let’s go over hedge fund activity in other stocks similar to Suburban Propane Partners LP (NYSE:SPH). These stocks are First Busey Corporation (NASDAQ:BUSE), Brinker International, Inc. (NYSE:EAT), Kulicke and Soffa Industries Inc. (NASDAQ:KLIC), and SPX Corporation (NYSE:SPXC). All of these stocks’ market caps match SPH’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| BUSE | 11 | 42651 | -2 |
| EAT | 28 | 238224 | -1 |
| KLIC | 17 | 229037 | 0 |
| SPXC | 16 | 82178 | -3 |
| Average | 18 | 148023 | -1.5 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 18 hedge funds with bullish positions and the average amount invested in these stocks was $148 million. That figure was $97 million in SPH’s case. Brinker International, Inc. (NYSE:EAT) is the most popular stock in this table. On the other hand First Busey Corporation (NASDAQ:BUSE) is the least popular one with only 11 bullish hedge fund positions. Compared to these stocks Suburban Propane Partners LP (NYSE:SPH) is even less popular than BUSE. Hedge funds dodged a bullet by taking a bearish stance towards SPH. Our calculations showed that the top 20 most popular hedge fund stocks returned 24.4% in 2019 through September 30th and outperformed the S&P 500 ETF (SPY) by 4 percentage points. Unfortunately SPH wasn’t nearly as popular as these 20 stocks (hedge fund sentiment was very bearish); SPH investors were disappointed as the stock returned -0.2% during the third quarter 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 many of these stocks already outperformed the market so far in 2019.
Disclosure: None. This article was originally published at Insider Monkey.
