In this article we will check out the progression of hedge fund sentiment towards Sundial Growers Inc. (NASDAQ:SNDL) and determine whether it is a good investment right now. We at Insider Monkey like to examine what billionaires and hedge funds think of a company before spending days of research on it. Given their 2 and 20 payment structure, hedge funds have more incentives and resources than the average investor. The funds have access to expert networks and get tips from industry insiders. They also employ numerous Ivy League graduates and MBAs. Like everyone else, hedge funds perform miserably at times, but their consensus picks have historically outperformed the market after risk adjustments.
Hedge fund interest in Sundial Growers Inc. (NASDAQ:SNDL) shares was flat at the end of last quarter. This is usually a negative indicator. At the end of this article we will also compare SNDL to other stocks including Cell Therapeutics Inc (NASDAQ:CTIC), MTBC, Inc. (NASDAQ:MTBC), and RR Donnelley & Sons Company (NASDAQ:RRD) to get a better sense of its popularity.
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If you’d ask most traders, hedge funds are seen as underperforming, old investment tools of yesteryear. While there are greater than 8000 funds in operation at present, We look at the top tier of this club, around 850 funds. Most estimates calculate that this group of people handle most of all hedge funds’ total asset base, and by tailing their finest picks, Insider Monkey has unsheathed various investment strategies that have historically defeated Mr. Market. Insider Monkey’s flagship short hedge fund strategy outperformed the S&P 500 short ETFs by around 20 percentage points per annum since its inception in March 2017. Our portfolio of short stocks lost 36% since February 2017 (through May 18th) even though the market was up 30% during the same period. We just shared a list of 8 short targets in our latest quarterly update .
At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, 2020’s unprecedented market conditions provide us with the highest number of trading opportunities in a decade. So we are checking out stocks recommended/scorned by legendary Bill Miller. We interview hedge fund managers and ask them about their best ideas. If you want to find out the best healthcare stock to buy right now, you can watch our latest hedge fund manager interview here. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. Our best call in 2020 was shorting the market when the S&P 500 was trading at 3150 after realizing the coronavirus pandemic’s significance before most investors. Keeping this in mind we’re going to take a glance at the latest hedge fund action encompassing Sundial Growers Inc. (NASDAQ:SNDL).
How have hedgies been trading Sundial Growers Inc. (NASDAQ:SNDL)?
Heading into the second quarter of 2020, a total of 4 of the hedge funds tracked by Insider Monkey were long this stock, a change of 0% from the previous quarter. The graph below displays the number of hedge funds with bullish position in SNDL over the last 18 quarters. With the smart money’s capital changing hands, there exists a select group of notable hedge fund managers who were upping their stakes meaningfully (or already accumulated large positions).
Of the funds tracked by Insider Monkey, Nick Niell’s Arrowgrass Capital Partners has the number one position in Sundial Growers Inc. (NASDAQ:SNDL), worth close to $0.7 million, accounting for 100% of its total 13F portfolio. On Arrowgrass Capital Partners’s heels is Adage Capital Management, led by Phill Gross and Robert Atchinson, holding a $0.6 million position; less than 0.1%% of its 13F portfolio is allocated to the stock. Remaining peers that are bullish contain Renaissance Technologies, Ken Griffin’s Citadel Investment Group and Ken Griffin’s Citadel Investment Group. In terms of the portfolio weights assigned to each position Arrowgrass Capital Partners allocated the biggest weight to Sundial Growers Inc. (NASDAQ:SNDL), around 100% of its 13F portfolio. Adage Capital Management is also relatively very bullish on the stock, dishing out 0.0017 percent of its 13F equity portfolio to SNDL.
We view hedge fund activity in the stock unfavorable, but in this case there was only a single hedge fund selling its entire position: Moore Global Investments. One hedge fund selling its entire position doesn’t always imply a bearish intent. Theoretically a hedge fund may decide to sell a promising position in order to invest the proceeds in a more promising idea. However, we don’t think this is the case in this case because only one of the 800+ hedge funds tracked by Insider Monkey identified as a viable investment and initiated a position in the stock (that fund was Renaissance Technologies).
Let’s now take a look at hedge fund activity in other stocks – not necessarily in the same industry as Sundial Growers Inc. (NASDAQ:SNDL) but similarly valued. We will take a look at Cell Therapeutics Inc (NASDAQ:CTIC), MTBC, Inc. (NASDAQ:MTBC), RR Donnelley & Sons Company (NASDAQ:RRD), and Acme United Corporation (NYSE:ACU). This group of stocks’ market caps resemble SNDL’s market cap.
|Ticker||No of HFs with positions||Total Value of HF Positions (x1000)||Change in HF Position|
View table here if you experience formatting issues.
As you can see these stocks had an average of 5.5 hedge funds with bullish positions and the average amount invested in these stocks was $11 million. That figure was $1 million in SNDL’s case. RR Donnelley & Sons Company (NASDAQ:RRD) is the most popular stock in this table. On the other hand MTBC, Inc. (NASDAQ:MTBC) is the least popular one with only 2 bullish hedge fund positions. Sundial Growers Inc. (NASDAQ:SNDL) is not the least popular stock in this group but hedge fund interest is still below average. Our calculations showed that top 10 most popular stocks among hedge funds returned 41.4% in 2019 and outperformed the S&P 500 ETF (SPY) by 10.1 percentage points. These stocks gained 8.3% in 2020 through the end of May and still beat the market by 13.2 percentage points. A small number of hedge funds were also right about betting on SNDL as the stock returned 33% during the second quarter and outperformed the market by an even larger margin.
Disclosure: None. This article was originally published at Insider Monkey.