Legendary investors such as Leon Cooperman and Seth Klarman earn enormous amounts of money for themselves and their investors by doing in-depth research on small-cap stocks that big brokerage houses don’t publish. Small cap stocks -especially when they are screened well- can generate substantial outperformance versus a boring index fund. That’s why we analyze the activity of those elite funds in these small-cap stocks. In the following paragraphs, we analyze Summit Materials Inc (NYSE:SUM) from the perspective of those elite funds.
Summit Materials Inc (NYSE:SUM) shareholders have witnessed an increase in activity from the world’s largest hedge funds lately, with 4 more hedge funds owning the company’s shares. The level and the change in hedge fund popularity aren’t the only variables you need to analyze to decipher hedge funds’ perspectives. A stock may witness a boost in popularity but it may still be less popular than similarly priced stocks. That’s why at the end of this article we will examine companies such as Allscripts Healthcare Solutions Inc (NASDAQ:MDRX), Lexington Realty Trust (NYSE:LXP), and Lexmark International Inc (NYSE:LXK) to gather more data points.
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What does the smart money think about Summit Materials Inc (NYSE:SUM)?
At the end of the third quarter, a total of 26 of the hedge funds tracked by Insider Monkey were bullish on this stock, an increase of 18% from the second quarter of 2016, a nice rebound after hedge fund ownership had slid throughout much of the year. With hedge funds’ positions undergoing their usual ebb and flow, there exists an “upper tier” of notable hedge fund managers who were upping their stakes substantially (or already accumulated large positions).
When looking at the institutional investors followed by Insider Monkey, Gabriel Plotkin’s Melvin Capital Management has the number one position in Summit Materials Inc (NYSE:SUM), worth close to $64.9 million, accounting for 1.7% of its total 13F portfolio. Coming in second is Phill Gross and Robert Atchinson of Adage Capital Management, with a $62.1 million position. Some other professional money managers that are bullish include Steve Cohen’s Point72 Asset Management, Ken Griffin’s Citadel Investment Group, and Israel Englander’s Millennium Management.
Now, key money managers have been driving this bullishness. Roystone Capital Partners, managed by Richard Barrera, created the biggest position in Summit Materials Inc (NYSE:SUM). According to its latest 13F filing, the fund had $27.7 million invested in the company at the end of the quarter. Lee Ainslie’s Maverick Capital also made a $9.1 million investment in the stock during the quarter. The other funds with new positions in the stock are Alexander Mitchell’s Scopus Asset Management, Stuart J. Zimmer’s Zimmer Partners, and Philip Hempleman’s Ardsley Partners.
Let’s check out hedge fund activity in other stocks similar to Summit Materials Inc (NYSE:SUM). These stocks are Allscripts Healthcare Solutions Inc (NASDAQ:MDRX), Lexington Realty Trust (NYSE:LXP), Lexmark International Inc (NYSE:LXK), and United Natural Foods, Inc. (NASDAQ:UNFI). 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 |
|---|---|---|---|
| MDRX | 29 | 552719 | 0 |
| LXP | 16 | 54051 | 3 |
| LXK | 25 | 303638 | -3 |
| UNFI | 21 | 162679 | 0 |
As you can see these stocks had an average of 23 hedge funds with bullish positions and the average amount invested in these stocks was $268 million. That figure was $471 million in SUM’s case. Allscripts Healthcare Solutions Inc (NASDAQ:MDRX) is the most popular stock in this table. On the other hand Lexington Realty Trust (NYSE:LXP) is the least popular one with only 16 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 more hedge funds own. In this regard MDRX might be a better candidate to consider a long position in.
Disclosure: None
