Many prominent investors, including Warren Buffett, David Tepper and Stan Druckenmiller, have been cautious regarding the current bull market and missed out as the stock market reached another high in recent weeks. On the other hand, technology hedge funds weren’t timid and registered double digit market beating gains. Financials, energy and industrial stocks initially suffered the most but many of these stocks delivered strong returns since November and hedge funds actually increased their positions in these stocks. In this article we will find out how hedge fund sentiment towards Summit Materials Inc (NYSE:SUM) changed recently.
Is SUM a buy or sell? Hedge fund interest in Summit Materials Inc (NYSE:SUM) shares was flat at the end of last quarter. This is usually a negative indicator. Our calculations also showed that SUM isn’t among the 30 most popular stocks among hedge funds (click for Q4 rankings). At the end of this article we will also compare SUM to other stocks including Enable Midstream Partners LP (NYSE:ENBL), Cimpress plc (NASDAQ:CMPR), and Allscripts Healthcare Solutions Inc (NASDAQ:MDRX) to get a better sense of its popularity.
Robert Atchinson of Adage Capital Management
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Do Hedge Funds Think SUM Is A Good Stock To Buy Now?
Heading into the first quarter of 2021, a total of 31 of the hedge funds tracked by Insider Monkey were long this stock, a change of 0% from the third quarter of 2020. The graph below displays the number of hedge funds with bullish position in SUM over the last 22 quarters. So, let’s review which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
More specifically, Interval Partners was the largest shareholder of Summit Materials Inc (NYSE:SUM), with a stake worth $48.7 million reported as of the end of December. Trailing Interval Partners was Wallace R. Weitz & Co., which amassed a stake valued at $34.6 million. Adage Capital Management, Citadel Investment Group, and Lodge Hill Capital 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 DG Capital Management allocated the biggest weight to Summit Materials Inc (NYSE:SUM), around 4.57% of its 13F portfolio. Lodge Hill Capital is also relatively very bullish on the stock, earmarking 4.3 percent of its 13F equity portfolio to SUM.
Since Summit Materials Inc (NYSE:SUM) has witnessed a decline in interest from the entirety of the hedge funds we track, it’s safe to say that there is a sect of money managers that slashed their entire stakes heading into Q1. It’s worth mentioning that Thomas E. Claugus’s GMT Capital cut the largest position of the “upper crust” of funds monitored by Insider Monkey, comprising close to $15.6 million in stock. Wayne Cooperman’s fund, Cobalt Capital Management, also cut its stock, about $8.3 million worth. These moves are interesting, as aggregate hedge fund interest stayed the same (this is a bearish signal in our experience).
Let’s go over hedge fund activity in other stocks – not necessarily in the same industry as Summit Materials Inc (NYSE:SUM) but similarly valued. These stocks are Enable Midstream Partners LP (NYSE:ENBL), Cimpress plc (NASDAQ:CMPR), Allscripts Healthcare Solutions Inc (NASDAQ:MDRX), Sleep Number Corporation (NASDAQ:SNBR), Palomar Holdings, Inc. (NASDAQ:PLMR), WSFS Financial Corporation (NASDAQ:WSFS), and Callaway Golf Company (NYSE:ELY). This group of stocks’ market caps resemble SUM’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| ENBL | 3 | 10582 | -1 |
| CMPR | 23 | 282174 | -2 |
| MDRX | 22 | 242031 | 0 |
| SNBR | 16 | 159072 | -5 |
| PLMR | 9 | 45272 | 1 |
| WSFS | 13 | 142709 | 1 |
| ELY | 40 | 488756 | 8 |
| Average | 18 | 195799 | 0.3 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 18 hedge funds with bullish positions and the average amount invested in these stocks was $196 million. That figure was $221 million in SUM’s case. Callaway Golf Company (NYSE:ELY) is the most popular stock in this table. On the other hand Enable Midstream Partners LP (NYSE:ENBL) is the least popular one with only 3 bullish hedge fund positions. Summit Materials Inc (NYSE:SUM) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for SUM is 69.4. 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 30 most popular stocks among hedge funds returned 81.2% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 26 percentage points. These stocks gained 12.2% in 2021 through April 12th and still beat the market by 1.5 percentage points. Hedge funds were also right about betting on SUM as the stock returned 47.1% since the end of Q4 (through 4/12) 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.
