Is STKL A Good Stock To Buy Now?

The latest 13F reporting period has come and gone, and Insider Monkey is again at the forefront when it comes to making use of this gold mine of data. We have processed the filings of the more than 817 world-class investment firms that we track and now have access to the collective wisdom contained in these filings, which are based on their September 30 holdings, data that is available nowhere else. Should you consider SunOpta, Inc. (NASDAQ:STKL) for your portfolio? We’ll look to this invaluable collective wisdom for the answer.

Is STKL a good stock to buy now? Hedge fund interest in SunOpta, Inc. (NASDAQ:STKL) shares was flat at the end of last quarter. This is usually a negative indicator. Our calculations also showed that STKL isn’t among the 30 most popular stocks among hedge funds (click for Q3 rankings and see the video for a quick look at the top 5 stocks). At the end of this article we will also compare STKL to other stocks including Star Bulk Carriers Corp. (NASDAQ:SBLK), Noble Midstream Partners LP (NYSE:NBLX), and VBI Vaccines, Inc. (NASDAQ:VBIV) to get a better sense of its popularity.

Video: Watch our video about the top 5 most popular hedge fund stocks.

Hedge funds’ reputation as shrewd investors has been tarnished in the last decade as their hedged returns couldn’t keep up with the unhedged returns of the market indices. 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 S&P 500 ETFs by 66 percentage points since March 2017 (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.


Howard Marks of Oaktree Capital Management

At Insider Monkey we scour multiple sources to uncover the next great investment idea. For example, Federal Reserve has been creating trillions of dollars electronically to keep the interest rates near zero. We believe this will lead to inflation and boost real estate prices. So, we recommended this real estate stock to our monthly premium newsletter subscribers. We go through lists like the 15 best blue chip stocks to pick the best large-cap stocks to buy. Even though we recommend positions in only a tiny fraction of the companies we analyze, we check out as many stocks as we can. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. You can subscribe to our free daily newsletter on our website. Keeping this in mind let’s take a look at the new hedge fund action surrounding SunOpta, Inc. (NASDAQ:STKL).

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

At the end of September, a total of 13 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 0% from the previous quarter. Below, you can check out the change in hedge fund sentiment towards STKL over the last 21 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.

Is STKL A Good Stock To Buy?

The largest stake in SunOpta, Inc. (NASDAQ:STKL) was held by Engaged Capital, which reported holding $72.9 million worth of stock at the end of September. It was followed by Ardsley Partners with a $62.2 million position. Other investors bullish on the company included Oaktree Capital Management, Portolan Capital Management, and Renaissance Technologies. In terms of the portfolio weights assigned to each position Ardsley Partners allocated the biggest weight to SunOpta, Inc. (NASDAQ:STKL), around 11.99% of its 13F portfolio. Engaged Capital is also relatively very bullish on the stock, designating 7.54 percent of its 13F equity portfolio to STKL.

Due to the fact that SunOpta, Inc. (NASDAQ:STKL) has experienced bearish sentiment from the entirety of the hedge funds we track, it’s safe to say that there was a specific group of fund managers who were dropping their entire stakes in the third quarter. Interestingly, Leonard Green’s Leonard Green & Partners dropped the largest position of the 750 funds monitored by Insider Monkey, worth close to $1.4 million in stock. John Overdeck and David Siegel’s fund, Two Sigma Advisors, also said goodbye to its stock, about $0.1 million worth. These bearish behaviors are intriguing to say the least, as total hedge fund interest stayed the same (this is a bearish signal in our experience).

Let’s go over hedge fund activity in other stocks similar to SunOpta, Inc. (NASDAQ:STKL). We will take a look at Star Bulk Carriers Corp. (NASDAQ:SBLK), Noble Midstream Partners LP (NYSE:NBLX), VBI Vaccines, Inc. (NASDAQ:VBIV), SMART Global Holdings, Inc. (NASDAQ:SGH), Heritage Financial Corporation (NASDAQ:HFWA), Westlake Chemical Partners LP (NYSE:WLKP), and Third Point Reinsurance Ltd (NYSE:TPRE). This group of stocks’ market valuations are closest to STKL’s market valuation.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
SBLK 5 303910 -2
NBLX 1 1820 0
VBIV 11 191461 1
SGH 14 287640 0
HFWA 6 14208 -1
WLKP 2 1933 -2
TPRE 19 29902 1
Average 8.3 118696 -0.4

View table here if you experience formatting issues.

As you can see these stocks had an average of 8.3 hedge funds with bullish positions and the average amount invested in these stocks was $119 million. That figure was $253 million in STKL’s case. Third Point Reinsurance Ltd (NYSE:TPRE) is the most popular stock in this table. On the other hand Noble Midstream Partners LP (NYSE:NBLX) is the least popular one with only 1 bullish hedge fund positions. SunOpta, Inc. (NASDAQ:STKL) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for STKL is 56.1. 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 20 most popular stocks among hedge funds returned 41.3% in 2019 and outperformed the S&P 500 ETF (SPY) by 10 percentage points. These stocks gained 32.9% in 2020 through December 8th and still beat the market by 16.2 percentage points. Hedge funds were also right about betting on STKL as the stock returned 33.2% since the end of Q3 (through 12/8) and outperformed the market. Hedge funds were rewarded for their relative bullishness.

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