Is SUI Stock A Buy or Sell?

A whopping number of 13F filings filed with U.S. Securities and Exchange Commission has been processed by Insider Monkey so that individual investors can look at the overall hedge fund sentiment towards the stocks included in their watchlists. These freshly-submitted public filings disclose money managers’ equity positions as of the end of the three-month period that ended December 31st, so let’s proceed with the discussion of the hedge fund sentiment on Sun Communities Inc (NYSE:SUI).

Is SUI stock a buy? Sun Communities Inc (NYSE:SUI) was in 27 hedge funds’ portfolios at the end of the fourth quarter of 2020. The all time high for this statistic is 31. SUI investors should pay attention to a decrease in support from the world’s most elite money managers lately. There were 31 hedge funds in our database with SUI holdings at the end of September. Our calculations also showed that SUI isn’t among the 30 most popular stocks among hedge funds (click for Q4 rankings).

John Overdeck of Two Sigma Advisors

At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, auto parts business is a recession resistant business, so we are taking a closer look at this discount auto parts stock that is growing at a 196% annualized rate. We go through lists like the 15 best micro-cap stocks to buy now 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. With all of this in mind let’s take a look at the recent hedge fund action surrounding Sun Communities Inc (NYSE:SUI).

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

At fourth quarter’s end, a total of 27 of the hedge funds tracked by Insider Monkey were long this stock, a change of -13% from one quarter earlier. Below, you can check out the change in hedge fund sentiment towards SUI over the last 22 quarters. With hedgies’ positions undergoing their usual ebb and flow, there exists a select group of key hedge fund managers who were upping their holdings considerably (or already accumulated large positions).

More specifically, Long Pond Capital was the largest shareholder of Sun Communities Inc (NYSE:SUI), with a stake worth $135.5 million reported as of the end of December. Trailing Long Pond Capital was Echo Street Capital Management, which amassed a stake valued at $128.8 million. Waratah Capital Advisors, Waterfront Capital Partners, and Millennium Management 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 Waterfront Capital Partners allocated the biggest weight to Sun Communities Inc (NYSE:SUI), around 6.14% of its 13F portfolio. SW Investment Management is also relatively very bullish on the stock, setting aside 5.58 percent of its 13F equity portfolio to SUI.

Because Sun Communities Inc (NYSE:SUI) has faced a decline in interest from the aggregate hedge fund industry, logic holds that there were a few funds that slashed their full holdings last quarter. Intriguingly, Ken Grossman and Glen Schneider’s SG Capital Management dumped the largest stake of all the hedgies followed by Insider Monkey, totaling about $6.7 million in stock, and Mark Coe’s Intrinsic Edge Capital was right behind this move, as the fund cut about $3.5 million worth. These bearish behaviors are interesting, as aggregate hedge fund interest dropped by 4 funds last quarter.

Let’s also examine hedge fund activity in other stocks similar to Sun Communities Inc (NYSE:SUI). These stocks are Solaredge Technologies Inc (NASDAQ:SEDG), M&T Bank Corporation (NYSE:MTB), Nomura Holdings, Inc. (NYSE:NMR), Avantor, Inc. (NYSE:AVTR), Healthpeak Properties, Inc. (NYSE:PEAK), Hess Corporation (NYSE:HES), and Ulta Beauty, Inc. (NASDAQ:ULTA). This group of stocks’ market values are closest to SUI’s market value.

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As you can see these stocks had an average of 31.6 hedge funds with bullish positions and the average amount invested in these stocks was $721 million. That figure was $601 million in SUI’s case. Avantor, Inc. (NYSE:AVTR) is the most popular stock in this table. On the other hand Nomura Holdings, Inc. (NYSE:NMR) is the least popular one with only 6 bullish hedge fund positions. Sun Communities Inc (NYSE:SUI) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for SUI is 48.1. 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 negative signal and we’d rather spend our time researching stocks that hedge funds are piling on. 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 surpassed the market again by 0.9 percentage points. Unfortunately SUI wasn’t nearly as popular as these 30 stocks (hedge fund sentiment was quite bearish); SUI investors were disappointed as the stock returned 5.2% since the end of December (through 4/19) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 30 most popular stocks among hedge funds as most of these stocks already outperformed the market in 2020.

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

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