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Was The Smart Money Right About Sun Life Financial Inc. (SLF)?

We hate to say this but, we told you so. On February 27th we published an article with the title Recession is Imminent: We Need A Travel Ban NOW and predicted a US recession when the S&P 500 Index was trading at the 3150 level. We also told you to short the market and buy long-term Treasury bonds. Our article also called for a total international travel ban. While we were warning you, President Trump minimized the threat and failed to act promptly. As a result of his inaction, we will now experience a deeper recession (see why hell is coming).

In these volatile markets we scrutinize hedge fund filings to get a reading on which direction each stock might be going. 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 at Insider Monkey have plowed through 835 13F filings that hedge funds and well-known value investors are required to file by the SEC. The 13F filings show the funds’ and investors’ portfolio positions as of December 31st. In this article we look at what those investors think of Sun Life Financial Inc. (NYSE:SLF).

Is Sun Life Financial Inc. (NYSE:SLF) worth your attention right now? Hedge funds are becoming hopeful. The number of long hedge fund positions rose by 3 lately. Our calculations also showed that SLF isn’t among the 30 most popular stocks among hedge funds (click for Q4 rankings and see the video at the end of this article for Q3 rankings).

BRIDGEWATER ASSOCIATES

Ray Dalio of Bridgewater Associates

We leave no stone unturned when looking for the next great investment idea. For example, COVID-19 pandemic is still the main driver of stock prices. So we are checking out this trader’s corona catalyst trades. 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 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 look at the latest hedge fund action encompassing Sun Life Financial Inc. (NYSE:SLF).

Hedge fund activity in Sun Life Financial Inc. (NYSE:SLF)

At the end of the fourth quarter, a total of 16 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 23% from the third quarter of 2019. By comparison, 10 hedge funds held shares or bullish call options in SLF a year ago. So, let’s see which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

The largest stake in Sun Life Financial Inc. (NYSE:SLF) was held by Renaissance Technologies, which reported holding $37.9 million worth of stock at the end of September. It was followed by GLG Partners with a $34.4 million position. Other investors bullish on the company included Arrowstreet Capital, D E Shaw, and Bridgewater Associates. In terms of the portfolio weights assigned to each position Unio Capital allocated the biggest weight to Sun Life Financial Inc. (NYSE:SLF), around 0.16% of its 13F portfolio. GLG Partners is also relatively very bullish on the stock, earmarking 0.11 percent of its 13F equity portfolio to SLF.

With a general bullishness amongst the heavyweights, specific money managers have been driving this bullishness. Laurion Capital Management, managed by Benjamin A. Smith, assembled the largest position in Sun Life Financial Inc. (NYSE:SLF). Laurion Capital Management had $1 million invested in the company at the end of the quarter. Donald Sussman’s Paloma Partners also made a $0.6 million investment in the stock during the quarter. The following funds were also among the new SLF investors: Mika Toikka’s AlphaCrest Capital Management, Michael Gelband’s ExodusPoint Capital, and Frederick DiSanto’s Ancora Advisors.

Let’s now take a look at hedge fund activity in other stocks similar to Sun Life Financial Inc. (NYSE:SLF). These stocks are Discover Financial Services (NYSE:DFS), Agilent Technologies Inc. (NYSE:A), Parker-Hannifin Corporation (NYSE:PH), and Baker Hughes Company (NYSE:BKR). All of these stocks’ market caps match SLF’s market cap.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
DFS 39 830938 -2
A 46 2470187 5
PH 39 971423 11
BKR 37 573421 3
Average 40.25 1211492 4.25

View table here if you experience formatting issues.

As you can see these stocks had an average of 40.25 hedge funds with bullish positions and the average amount invested in these stocks was $1211 million. That figure was $133 million in SLF’s case. Agilent Technologies Inc. (NYSE:A) is the most popular stock in this table. On the other hand Baker Hughes Company (NYSE:BKR) is the least popular one with only 37 bullish hedge fund positions. Compared to these stocks Sun Life Financial Inc. (NYSE:SLF) is even less popular than BKR. Hedge funds dodged a bullet by taking a bearish stance towards SLF. Our calculations showed that the top 10 most popular hedge fund stocks returned 41.4% in 2019 and outperformed the S&P 500 ETF (SPY) by 10.1 percentage points. These stocks gained 1.0% in 2020 through May 1st but managed to beat the market by 12.9 percentage points. Unfortunately SLF wasn’t nearly as popular as these 10 stocks (hedge fund sentiment was very bearish); SLF investors were disappointed as the stock returned -26.8% during the same time period and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 10 most popular stocks among hedge funds as most of these stocks already outperformed the market so far in 2020.
5 Most Popular Stocks Among Hedge Funds
Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.

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

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