Is SUP A Good Stock To Buy Now?

We at Insider Monkey have gone over 817 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 September 30th. In this article, we look at what those funds think of Superior Industries International Inc. (NYSE:SUP) based on that data.

Is SUP a good stock to buy now? Investors who are in the know were becoming less confident. The number of bullish hedge fund positions dropped by 1 in recent months. Superior Industries International Inc. (NYSE:SUP) was in 12 hedge funds’ portfolios at the end of September. The all time high for this statistics is 17. Our calculations also showed that SUP 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.

Why do we pay any attention at all to hedge fund sentiment? Our research has shown that a select group of hedge fund holdings 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’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.

Millennium Management, Catapult Capital Management

Israel Englander of Millennium 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. With all of this in mind we’re going to take a look at the recent hedge fund action encompassing Superior Industries International Inc. (NYSE:SUP).

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

At the end of the third quarter, a total of 12 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -8% from one quarter earlier. By comparison, 17 hedge funds held shares or bullish call options in SUP a year ago. With the smart money’s sentiment swirling, there exists an “upper tier” of noteworthy hedge fund managers who were adding to their holdings considerably (or already accumulated large positions).

Is SUP A Good Stock To Buy?

The largest stake in Superior Industries International Inc. (NYSE:SUP) was held by DC Capital Partners, which reported holding $1.5 million worth of stock at the end of September. It was followed by Millennium Management with a $0.8 million position. Other investors bullish on the company included Renaissance Technologies, Plaisance Capital, and GAMCO Investors. In terms of the portfolio weights assigned to each position DC Capital Partners allocated the biggest weight to Superior Industries International Inc. (NYSE:SUP), around 8.5% of its 13F portfolio. Plaisance Capital is also relatively very bullish on the stock, dishing out 1.1 percent of its 13F equity portfolio to SUP.

We view hedge fund activity in the stock unfavorable, but in this case there was only a single hedge fund selling its entire position: Arrowstreet Capital. 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 none of the 750+ hedge funds tracked by Insider Monkey identified SUP as a viable investment and initiated a position in the stock.

Let’s also examine hedge fund activity in other stocks similar to Superior Industries International Inc. (NYSE:SUP). These stocks are Opiant Pharmaceuticals, Inc. (NASDAQ:OPNT), Unico American Corporation (NASDAQ:UNAM), CPI Aerostructures, Inc. (NYSE:CVU), BP Prudhoe Bay Royalty Trust (NYSE:BPT), Panhandle Oil and Gas Inc. (NYSE:PHX), Dare Bioscience, Inc. (NASDAQ:DARE), and Condor Hospitality Trust, Inc. (NASDAQ:CDOR). This group of stocks’ market valuations match SUP’s market valuation.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
OPNT 3 2650 -1
UNAM 1 136 0
CVU 2 2612 -2
BPT 1 24 0
PHX 6 3836 -5
DARE 1 703 0
CDOR 3 1170 0
Average 2.4 1590 -1.1

View table here if you experience formatting issues.

As you can see these stocks had an average of 2.4 hedge funds with bullish positions and the average amount invested in these stocks was $2 million. That figure was $5 million in SUP’s case. Panhandle Oil and Gas Inc. (NYSE:PHX) is the most popular stock in this table. On the other hand Unico American Corporation (NASDAQ:UNAM) is the least popular one with only 1 bullish hedge fund positions. Compared to these stocks Superior Industries International Inc. (NYSE:SUP) is more popular among hedge funds. Our overall hedge fund sentiment score for SUP is 75.2. 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 returned 32.9% in 2020 through December 8th but still managed to beat the market by 16.2 percentage points. Hedge funds were also right about betting on SUP as the stock returned 302.4% since the end of September (through 12/8) and outperformed the market by an even larger margin. Hedge funds were clearly right about piling into this stock relative to other stocks with similar market capitalizations.

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