Were Hedge Funds Right About Sun Communities Inc (SUI)?

Insider Monkey has processed numerous 13F filings of hedge funds and successful value investors to create an extensive database of hedge fund holdings. The 13F filings show the hedge funds’ and successful investors’ positions as of the end of the third quarter. You can find articles about an individual hedge fund’s trades on numerous financial news websites. However, in this article we will take a look at their collective moves over the last 6 years and analyze what the smart money thinks of Sun Communities Inc (NYSE:SUI) based on that data and determine whether they were really smart about the stock.

Is Sun Communities Inc (NYSE:SUI) worth your attention right now? Money managers were buying. The number of long hedge fund positions inched up by 3 lately. Sun Communities Inc (NYSE:SUI) was in 33 hedge funds’ portfolios at the end of September. The all time high for this statistic is 35. Our calculations also showed that SUI isn’t among the 30 most popular stocks among hedge funds (click for Q3 rankings). There were 30 hedge funds in our database with SUI holdings at the end of June.

At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, lithium prices have more than doubled over the past year, so we go through lists like the 10 best EV stocks to pick the next Tesla that will deliver a 10x return. Even though we recommend positions in only a tiny fraction of the companies we analyze, we check out as many stocks as we can. Keeping this in mind we’re going to take a look at the new hedge fund action regarding Sun Communities Inc (NYSE:SUI).

Blair Levinsky of Waratah Capital Advisors

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

At the end of September, a total of 33 of the hedge funds tracked by Insider Monkey were long this stock, a change of 10% from the previous quarter. Below, you can check out the change in hedge fund sentiment towards SUI over the last 25 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.

The largest stake in Sun Communities Inc (NYSE:SUI) was held by Echo Street Capital Management, which reported holding $187.4 million worth of stock at the end of September. It was followed by Millennium Management with a $138.6 million position. Other investors bullish on the company included Waratah Capital Advisors, Citadel Investment Group, and Waterfront Capital Partners. In terms of the portfolio weights assigned to each position SW Investment Management allocated the biggest weight to Sun Communities Inc (NYSE:SUI), around 5.89% of its 13F portfolio. Waterfront Capital Partners is also relatively very bullish on the stock, dishing out 3.97 percent of its 13F equity portfolio to SUI.

With a general bullishness amongst the heavyweights, specific money managers have jumped into Sun Communities Inc (NYSE:SUI) headfirst. Marshall Wace LLP, managed by Paul Marshall and Ian Wace, established the most outsized position in Sun Communities Inc (NYSE:SUI). Marshall Wace LLP had $12.4 million invested in the company at the end of the quarter. Paul Tudor Jones’s Tudor Investment Corp also initiated a $3.1 million position during the quarter. The other funds with brand new SUI positions are Greg Eisner’s Engineers Gate Manager, Mika Toikka’s AlphaCrest Capital Management, and Joel Greenblatt’s Gotham Asset Management.

Let’s now take a look at hedge fund activity in other stocks – not necessarily in the same industry as Sun Communities Inc (NYSE:SUI) but similarly valued. We will take a look at Martin Marietta Materials, Inc. (NYSE:MLM), Fox Corporation (NASDAQ:FOX), Edison International (NYSE:EIX), Fortis Inc. (NYSE:FTS), ICON Public Limited Company (NASDAQ:ICLR), POSCO (NYSE:PKX), and CarMax Inc (NYSE:KMX). This group of stocks’ market caps match SUI’s market cap.

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As you can see these stocks had an average of 25.6 hedge funds with bullish positions and the average amount invested in these stocks was $1038 million. That figure was $795 million in SUI’s case. Martin Marietta Materials, Inc. (NYSE:MLM) is the most popular stock in this table. On the other hand Fortis Inc. (NYSE:FTS) is the least popular one with only 5 bullish hedge fund positions. Sun Communities Inc (NYSE:SUI) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for SUI is 74.1. 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. Our calculations showed that top 5 most popular stocks among hedge funds returned 95.8% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 40 percentage points. These stocks gained 29.6% in 2021 and still managed to beat the market by another 3.6 percentage points. Hedge funds were somewhat right about betting on SUI as the stock returned 2.5% since the end of September (through January 31st) and outperformed the top 5 hedge fund stocks but not the market. This is a rare phenomenon as top hedge fund stocks usually beat the market over the long-term.

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