Dear Valued Visitor,

We have noticed that you are using an ad blocker software.

Although advertisements on the web pages may degrade your experience, our business certainly depends on them and we can only keep providing you high-quality research based articles as long as we can display ads on our pages.

To view this article, you can disable your ad blocker and refresh this page or simply login.

We only allow registered users to use ad blockers. You can sign up for free by clicking here or you can login if you are already a member.

Hedge Funds Like These Stocks A Lot More Than Sunoco LP (SUN)

How do you pick the next stock to invest in? One way would be to spend hours of research browsing through thousands of publicly traded companies. However, an easier way is to look at the stocks that smart money investors are collectively bullish on. Hedge funds and other institutional investors usually invest large amounts of capital and have to conduct due diligence while choosing their next pick. They don’t always get it right, but, on average, their stock picks have historically generated strong returns after adjusting for known risk factors. With this in mind, let’s take a look at the recent hedge fund activity surrounding Sunoco LP (NYSE:SUN).

shale, gas, fuel, human, pipe, hands, natural, tap, red, valve, pipeline, engineering, yellow, pump, line, ilustrative, design,symbol,


Is Sunoco LP (NYSE:SUN) ready to rally soon? Prominent investors are in a bearish mood. The number of bullish hedge fund positions stayed the same in the third quarter, which is a slightly negative development in our experience. Sunoco LP (NYSE:SUN) was in ten hedge funds’ portfolios at the end of September. There were ten hedge funds in our database with Sunoco LP (NYSE:SUN) positions at the end of the previous quarter. 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 Golar LNG Limited (USA) (NASDAQ:GLNG), The Wendy’s Company (NASDAQ:WEN), and Avolon Holdings Ltd (NYSE:AVOL) to gather more data points.

Follow Sunoco Lp
Trade (SUN) Now!

In the financial world there are a lot of methods investors have at their disposal to grade their stock investments. A duo of the most innovative methods are hedge fund and insider trading activity. Experts at Insider Monkey, a website specializing in hedge funds, have shown that, historically, those who follow the best picks of the elite money managers can outperform the broader indices by a healthy amount (see the details here).

Keeping this in mind, we’re going to go over the new action regarding Sunoco LP (NYSE:SUN).

What does the smart money think about Sunoco LP (NYSE:SUN)?

Heading into Q4, a total of ten of the hedge funds tracked by Insider Monkey were bullish in this stock, flat over the third quarter. With hedge funds’ positions undergoing their usual ebb and flow, there exists a select group of noteworthy hedge fund managers who were increasing their holdings substantially (or already accumulated large positions).

According to publicly available hedge fund holdings data compiled by Insider Monkey, Jonathan Lourie and Stuart Fiertz’s Cheyne Capital has the most valuable position in Sunoco LP (NYSE:SUN), worth close to $36.1 million, amounting to 17% of its total 13F portfolio. The second-largest stake is held by Charles Davidson of Wexford Capital, with a $13.8 million position; the fund manager has 2.7% of his 13F portfolio invested in the stock. Some other peers with similar optimism include Israel Englander’s Millennium Management, Matthew Hulsizer’s PEAK6 Capital Management, and Ed Bosek’s BeaconLight Capital.

Seeing as Sunoco LP (NYSE:SUN) has faced bearish sentiment from the aggregate hedge fund industry, it’s safe to say that there were a few money managers who sold off their positions entirely last quarter. At the top of the heap, David Atterbury’s Whetstone Capital Advisors dropped the biggest stake of all the hedgies followed by Insider Monkey, totaling about $1.1 million in stock, while Millennium Management Subsidiary of Green Arrow Capital Management was right behind this move, as the fund dropped about $1 million worth of shares. These transactions are intriguing to say the least, as total hedge fund interest stayed the same (this is a bearish signal in our experience).

Let’s also review hedge fund activity in other stocks similar to Sunoco LP (NYSE:SUN). These stocks are Golar LNG Limited (USA) (NASDAQ:GLNG), The Wendy’s Company (NASDAQ:WEN), Avolon Holdings Ltd (NYSE:AVOL), and UMB Financial Corporation (NASDAQ:UMBF). This group of stocks’ market valuations resemble Sunoco LP (NYSE:SUN)’s market valuation.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
GLNG 39 682454 -5
WEN 26 632213 -12
AVOL 12 185412 -3
UMBF 11 68988 0

As you can see these stocks had an average of 22 hedge funds with bullish positions and the average amount invested in these stocks was $392 million, compared to just $57 million invested in Sunoco LP. Golar LNG Limited (USA) (NASDAQ:GLNG) is the most popular stock in this table. On the other hand UMB Financial Corporation (NASDAQ:UMBF) is the least popular one with only 11 bullish hedge fund positions. Compared to these stocks Sunoco LP (NYSE:SUN) is even less popular than UMB Financial Corporation (NASDAQ:UMBF). Considering that hedge funds aren’t fond of this stock, it may be a good idea to analyze it in detail and understand why the smart money isn’t behind this stock. This isn’t necessarily bad news. Although it is possible that hedge funds may think the stock is overpriced and view the stock as a short candidate, they may not be very familiar with the bullish thesis. In either case more research is warranted.

DOWNLOAD FREE REPORT: Warren Buffett's Best Stock Picks

Let Warren Buffett, George Soros, Steve Cohen, and Daniel Loeb WORK FOR YOU.

If you want to beat the low cost index funds by 19 percentage points per year, look no further than our monthly newsletter.In this free report you can find an in-depth analysis of the performance of Warren Buffett's entire historical stock picks. We uncovered Warren Buffett's Best Stock Picks and a way to for Buffett to improve his returns by more than 4 percentage points per year.

Bonus Biotech Stock Pick: You can also find a detailed bonus biotech stock pick that we expect to return more than 50% within 12 months.
Subscribe me to Insider Monkey's Free Daily Newsletter
This is a FREE report from Insider Monkey. Credit Card is NOT required.