Is Suburban Propane Partners LP (NYSE:SPH) a good place to invest some of your money right now? We can gain invaluable insight to help us answer that question by studying the investment trends of top investors, who employ world-class Ivy League graduates, who are given immense resources and industry contacts to put their financial expertise to work. The top picks of these firms have historically outperformed the market when we account for known risk factors, making them very valuable investment ideas.
Is Suburban Propane Partners LP (NYSE:SPH) a good stock to buy now? SPH was in 3 hedge funds’ portfolios at the end of September. The all time high for this statistics is 7. SPH has seen an increase in hedge fund sentiment of late. There were 2 hedge funds in our database with SPH holdings at the end of June. Our calculations also showed that SPH 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).
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 was able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by more than 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’ll significantly underperform the market. We have been tracking and sharing the list of these stocks since February 2017 and they lost 13% through November 17th. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
Matthew Hulsizer of PEAK6 Capital
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 10 most profitable companies in the world 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. With all of this in mind we’re going to analyze the fresh hedge fund action regarding Suburban Propane Partners LP (NYSE:SPH).
What have hedge funds been doing with Suburban Propane Partners LP (NYSE:SPH)?
At third quarter’s end, a total of 3 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 50% from the previous quarter. The graph below displays the number of hedge funds with bullish position in SPH over the last 21 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.
When looking at the institutional investors followed by Insider Monkey, Peter Rathjens, Bruce Clarke and John Campbell’s Arrowstreet Capital has the biggest position in Suburban Propane Partners LP (NYSE:SPH), worth close to $6.3 million, corresponding to less than 0.1%% of its total 13F portfolio. Coming in second is John A. Levin of Levin Capital Strategies, with a $4.4 million position; 0.6% of its 13F portfolio is allocated to the company. Remaining professional money managers that are bullish contain Matthew Hulsizer’s PEAK6 Capital Management, Ken Griffin’s Citadel Investment Group and Ken Griffin’s Citadel Investment Group. In terms of the portfolio weights assigned to each position Levin Capital Strategies allocated the biggest weight to Suburban Propane Partners LP (NYSE:SPH), around 0.58% of its 13F portfolio. Arrowstreet Capital is also relatively very bullish on the stock, earmarking 0.01 percent of its 13F equity portfolio to SPH.
As one would reasonably expect, key hedge funds were breaking ground themselves. Levin Capital Strategies, managed by John A. Levin, initiated the biggest position in Suburban Propane Partners LP (NYSE:SPH). Levin Capital Strategies had $4.4 million invested in the company at the end of the quarter.
Let’s go over hedge fund activity in other stocks – not necessarily in the same industry as Suburban Propane Partners LP (NYSE:SPH) but similarly valued. We will take a look at DiamondRock Hospitality Company (NYSE:DRH), Translate Bio, Inc. (NASDAQ:TBIO), GenMark Diagnostics, Inc (NASDAQ:GNMK), The Buckle, Inc. (NYSE:BKE), Re/Max Holdings Inc (NYSE:RMAX), Inseego Corp. (NASDAQ:INSG), and Adverum Biotechnologies, Inc. (NASDAQ:ADVM). All of these stocks’ market caps are similar to SPH’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| DRH | 14 | 63389 | -2 |
| TBIO | 23 | 342432 | -3 |
| GNMK | 25 | 297839 | 1 |
| BKE | 18 | 56050 | 1 |
| RMAX | 11 | 48168 | 4 |
| INSG | 11 | 19774 | 2 |
| ADVM | 30 | 413121 | 5 |
| Average | 18.9 | 177253 | 1.1 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 18.9 hedge funds with bullish positions and the average amount invested in these stocks was $177 million. That figure was $11 million in SPH’s case. Adverum Biotechnologies, Inc. (NASDAQ:ADVM) is the most popular stock in this table. On the other hand Re/Max Holdings Inc (NYSE:RMAX) is the least popular one with only 11 bullish hedge fund positions. Compared to these stocks Suburban Propane Partners LP (NYSE:SPH) is even less popular than RMAX. Our overall hedge fund sentiment score for SPH is 18.9. 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. Hedge funds dodged a bullet by taking a bearish stance towards SPH. Our calculations showed that the top 20 most popular hedge fund stocks returned 41.3% in 2019 and outperformed the S&P 500 ETF (SPY) by 10 percentage points. These stocks gained 28.1% in 2020 through November 23rd but managed to beat the market again by 15.4 percentage points. Unfortunately SPH wasn’t nearly as popular as these 20 stocks (hedge fund sentiment was very bearish); SPH investors were disappointed as the stock returned 0.3% since the end of the third quarter (through 11/23) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 20 most popular stocks among hedge funds as most of these stocks already outperformed the market so far in 2020.
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Disclosure: None. This article was originally published at Insider Monkey.
