We at Insider Monkey have gone over 738 13F filings that hedge funds and prominent investors are required to file by the SEC The 13F filings show the funds’ and investors’ portfolio positions as of March 31st. In this article, we look at what those funds think of Sun Life Financial Inc. (NYSE:SLF) based on that data.
Is Sun Life Financial Inc. (NYSE:SLF) a buy right now? The smart money is becoming hopeful. The number of bullish hedge fund positions moved up by 1 lately. Our calculations also showed that SLF isn’t among the 30 most popular stocks among hedge funds.
So, why do we pay attention to hedge fund sentiment before making any investment decisions? Our research has shown that hedge funds’ small-cap stock picks managed to beat the market by double digits annually between 1999 and 2016, but the margin of outperformance has been declining in recent years. Nevertheless, we were still able to identify in advance a select group of hedge fund holdings that outperformed the market by 40 percentage points since May 2014 through May 30, 2019 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that underperformed the market by 10 percentage points annually between 2006 and 2017. Interestingly the margin of underperformance of these stocks has been increasing in recent years. Investors who are long the market and short these stocks would have returned more than 27% annually between 2015 and 2017. We have been tracking and sharing the list of these stocks since February 2017 in our quarterly newsletter. Even if you aren’t comfortable with shorting stocks, you should at least avoid initiating long positions in our short portfolio.
We’re going to take a look at the fresh hedge fund action surrounding Sun Life Financial Inc. (NYSE:SLF).
How are hedge funds trading Sun Life Financial Inc. (NYSE:SLF)?
At Q1’s end, a total of 11 of the hedge funds tracked by Insider Monkey were long this stock, a change of 10% from one quarter earlier. On the other hand, there were a total of 8 hedge funds with a bullish position in SLF a year ago. With the smart money’s capital changing hands, there exists a few key hedge fund managers who were adding to their holdings meaningfully (or already accumulated large positions).
The largest stake in Sun Life Financial Inc. (NYSE:SLF) was held by Two Sigma Advisors, which reported holding $29.4 million worth of stock at the end of March. It was followed by AQR Capital Management with a $25.7 million position. Other investors bullish on the company included GLG Partners, Renaissance Technologies, and Bridgewater Associates.
With a general bullishness amongst the heavyweights, specific money managers have been driving this bullishness. Millennium Management, managed by Israel Englander, assembled the biggest position in Sun Life Financial Inc. (NYSE:SLF). Millennium Management had $1.4 million invested in the company at the end of the quarter.
Let’s also examine hedge fund activity in other stocks similar to Sun Life Financial Inc. (NYSE:SLF). We will take a look at PPL Corporation (NYSE:PPL), DTE Energy Company (NYSE:DTE), Palo Alto Networks Inc (NYSE:PANW), and Ventas, Inc. (NYSE:VTR). All of these stocks’ market caps match SLF’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| PPL | 22 | 867762 | -1 |
| DTE | 25 | 718544 | 2 |
| PANW | 44 | 2558221 | -2 |
| VTR | 19 | 300131 | 5 |
| Average | 27.5 | 1111165 | 1 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 27.5 hedge funds with bullish positions and the average amount invested in these stocks was $1111 million. That figure was $103 million in SLF’s case. Palo Alto Networks Inc (NYSE:PANW) is the most popular stock in this table. On the other hand Ventas, Inc. (NYSE:VTR) is the least popular one with only 19 bullish hedge fund positions. Compared to these stocks Sun Life Financial Inc. (NYSE:SLF) is even less popular than VTR. Our calculations showed that top 20 most popular stocks among hedge funds returned 6.2% in Q2 through June 19th and outperformed the S&P 500 ETF (SPY) by nearly 3 percentage points. A small number of hedge funds were also right about betting on SLF, though not to the same extent, as the stock returned 6% during the same time frame and outperformed the market as well.
Disclosure: None. This article was originally published at Insider Monkey.
