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Should I Avoid Ball Corporation (BLL)?

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Our extensive research has shown that imitating the smart money can generate significant returns for retail investors, which is why we track nearly 900 active prominent money managers and analyze their quarterly 13F filings. The stocks that are heavily bought by hedge funds historically outperformed the market, though there is no shortage of high profile failures like hedge funds' 2018 losses in Facebook and Apple. Let’s take a closer look at what the funds we track think about Ball Corporation (NYSE:BLL) in this article.

Ball Corporation (NYSE:BLL) was in 27 hedge funds' portfolios at the end of the third quarter of 2021. The all time high for this statistic is 44. BLL shareholders have witnessed a decrease in hedge fund sentiment of late. There were 44 hedge funds in our database with BLL holdings at the end of June. Our calculations also showed that BLL isn't among the 30 most popular stocks among hedge funds (click for Q3 rankings).

At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, lithium prices have more than doubled over the past year, so we go through lists like the 10 best EV stocks to pick the next Tesla that will deliver a 10x return. Even though we recommend positions in only a tiny fraction of the companies we analyze, we check out as many stocks as we can. Keeping this in mind let's take a peek at the new hedge fund action encompassing Ball Corporation (NYSE:BLL).

Daniel Sundheim D1 Capital
Daniel Sundheim D1 Capital

Daniel Sundheim of D1 Capital

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

At Q3's end, a total of 27 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -39% from the previous quarter. By comparison, 33 hedge funds held shares or bullish call options in BLL a year ago. With the smart money's sentiment swirling, there exists an "upper tier" of key hedge fund managers who were upping their holdings meaningfully (or already accumulated large positions).

The largest stake in Ball Corporation (NYSE:BLL) was held by D1 Capital Partners, which reported holding $675.5 million worth of stock at the end of September. It was followed by Chilton Investment Company with a $315.8 million position. Other investors bullish on the company included Echo Street Capital Management, Iridian Asset Management, and Maverick Capital. In terms of the portfolio weights assigned to each position Bluegrass Capital Partners allocated the biggest weight to Ball Corporation (NYSE:BLL), around 8.04% of its 13F portfolio. Chilton Investment Company is also relatively very bullish on the stock, earmarking 7.79 percent of its 13F equity portfolio to BLL.

Due to the fact that Ball Corporation (NYSE:BLL) has witnessed bearish sentiment from the entirety of the hedge funds we track, it's easy to see that there lies a certain "tier" of fund managers that elected to cut their positions entirely heading into Q4. It's worth mentioning that Ken Griffin's Citadel Investment Group said goodbye to the biggest position of the 750 funds followed by Insider Monkey, valued at about $57.4 million in stock, and Peter Rathjens, Bruce Clarke and John Campbell's Arrowstreet Capital was right behind this move, as the fund sold off about $51.4 million worth. These transactions are intriguing to say the least, as aggregate hedge fund interest was cut by 17 funds heading into Q4.

Let's check out hedge fund activity in other stocks - not necessarily in the same industry as Ball Corporation (NYSE:BLL) but similarly valued. We will take a look at Lennar Corporation (NYSE:LEN), Fifth Third Bancorp (NASDAQ:FITB), Alexandria Real Estate Equities Inc (NYSE:ARE), MPLX LP (NYSE:MPLX), Carnival Corporation & plc (NYSE:CCL), Nucor Corporation (NYSE:NUE), and Valero Energy Corporation (NYSE:VLO). This group of stocks' market valuations are similar to BLL's market valuation.

[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position LEN,50,1706131,0 FITB,28,283754,-13 ARE,26,489883,-2 MPLX,8,90948,-3 CCL,36,520667,5 NUE,25,199344,-7 VLO,32,289108,-6 Average,29.3,511405,-3.7 [/table]

View table here if you experience formatting issues.

As you can see these stocks had an average of 29.3 hedge funds with bullish positions and the average amount invested in these stocks was $511 million. That figure was $1457 million in BLL's case. Lennar Corporation (NYSE:LEN) is the most popular stock in this table. On the other hand MPLX LP (NYSE:MPLX) is the least popular one with only 8 bullish hedge fund positions. Ball Corporation (NYSE:BLL) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for BLL is 29. 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. This is a slightly negative signal and we'd rather spend our time researching stocks that hedge funds are piling on. Our calculations showed that top 5 most popular stocks among hedge funds returned 95.8% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 40 percentage points. These stocks gained 31.1% in 2021 through December 9th and surpassed the market again by 5.1 percentage points. Unfortunately BLL wasn't nearly as popular as these 5 stocks (hedge fund sentiment was quite bearish); BLL investors were disappointed as the stock returned 3.2% since the end of September (through 12/9) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 5 most popular stocks among hedge funds as most of these stocks already outperformed the market in 2021.

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