Hedge Funds Are Crazy About SunOpta, Inc. (STKL)

Out of thousands of stocks that are currently traded on the market, it is difficult to identify those that will really generate strong returns. Hedge funds and institutional investors spend millions of dollars on analysts with MBAs and PhDs, who are industry experts and well connected to other industry and media insiders on top of that. Individual investors can piggyback the hedge funds employing these talents and can benefit from their vast resources and knowledge in that way. We analyze quarterly 13F filings of nearly 900 hedge funds and, by looking at the smart money sentiment that surrounds a stock, we can determine whether it has the potential to beat the market over the long-term. Therefore, let’s take a closer look at what smart money thinks about SunOpta, Inc. (NASDAQ:STKL).

Is SunOpta, Inc. (NASDAQ:STKL) going to take off soon? Hedge funds were becoming more confident. The number of bullish hedge fund bets inched up by 5 recently. SunOpta, Inc. (NASDAQ:STKL) was in 26 hedge funds’ portfolios at the end of the second quarter of 2021. The all time high for this statistic was previously 22. This means the bullish number of hedge fund positions in this stock currently sits at its all time high. Our calculations also showed that STKL isn’t among the 30 most popular stocks among hedge funds (click for Q2 rankings). There were 21 hedge funds in our database with STKL holdings at the end of March.

Why do we pay any attention at all to hedge fund sentiment? Our research has shown that a select group of hedge fund holdings outperformed the S&P 500 ETFs by 79 percentage points since March 2017 (see the details here). That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.

Nelson Obus of Wynnefield Capital

Now let’s analyze the new hedge fund action regarding SunOpta, Inc. (NASDAQ:STKL).

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

At second quarter’s end, a total of 26 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 24% from one quarter earlier. The graph below displays the number of hedge funds with bullish position in STKL over the last 24 quarters. So, let’s find out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

More specifically, Oaktree Capital Management was the largest shareholder of SunOpta, Inc. (NASDAQ:STKL), with a stake worth $218.9 million reported as of the end of June. Trailing Oaktree Capital Management was Engaged Capital, which amassed a stake valued at $120.3 million. Portolan Capital Management, Driehaus Capital, and Ardsley Partners 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 Engaged Capital allocated the biggest weight to SunOpta, Inc. (NASDAQ:STKL), around 9.32% of its 13F portfolio. Oaktree Capital Management is also relatively very bullish on the stock, dishing out 2.96 percent of its 13F equity portfolio to STKL.

Now, key hedge funds were breaking ground themselves. Manatuck Hill Partners, managed by Mark Broach, established the most outsized position in SunOpta, Inc. (NASDAQ:STKL). Manatuck Hill Partners had $3.2 million invested in the company at the end of the quarter. Nelson Obus’s Wynnefield Capital also made a $2.6 million investment in the stock during the quarter. The other funds with new positions in the stock are Peter Muller’s PDT Partners, Michael Gelband’s ExodusPoint Capital, and Donald Sussman’s Paloma Partners.

Let’s now review hedge fund activity in other stocks similar to SunOpta, Inc. (NASDAQ:STKL). These stocks are Scorpio Tankers Inc. (NYSE:STNG), Gulfport Energy Corporation (NYSE:GPOR), Ideanomics, Inc. (NASDAQ:IDEX), Talos Energy, Inc. (NYSE:TALO), Zealand Pharma A/S (NASDAQ:ZEAL), IMAX Corporation (NYSE:IMAX), and Golden Entertainment Inc (NASDAQ:GDEN). All of these stocks’ market caps resemble STKL’s market cap.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
STNG 20 116309 0
GPOR 15 717569 15
IDEX 6 34858 -1
TALO 13 66406 3
ZEAL 1 15071 0
IMAX 24 202903 2
GDEN 21 216894 3
Average 14.3 195716 3.1

View table here if you experience formatting issues.

As you can see these stocks had an average of 14.3 hedge funds with bullish positions and the average amount invested in these stocks was $196 million. That figure was $515 million in STKL’s case. IMAX Corporation (NYSE:IMAX) is the most popular stock in this table. On the other hand Zealand Pharma A/S (NASDAQ:ZEAL) is the least popular one with only 1 bullish hedge fund positions. Compared to these stocks SunOpta, Inc. (NASDAQ:STKL) is more popular among hedge funds. Our overall hedge fund sentiment score for STKL is 90. 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 24.9% in 2021 through October 15th and still beat the market by 4.5 percentage points. Unfortunately STKL wasn’t nearly as popular as these 5 stocks and hedge funds that were betting on STKL were disappointed as the stock returned -33.3% since the end of the second quarter (through 10/15) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 5 most popular stocks among hedge funds as most of these stocks already outperformed the market since 2019.

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