The latest 13F reporting period has come and gone, and Insider Monkey have plowed through 821 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 March 31st, a week after the market trough. Now, we are almost done with the second quarter. Investors decided to bet on the economic recovery and a stock market rebound. S&P 500 Index returned almost 20% this quarter. In this article you are going to find out whether hedge funds thoughtGraphic Packaging Holding Company (NYSE:GPK) was a good investment heading into the second quarter and how the stock traded in comparison to the top hedge fund picks.
Graphic Packaging Holding Company (NYSE:GPK) investors should be aware of a decrease in hedge fund sentiment lately. GPK was in 33 hedge funds' portfolios at the end of the first quarter of 2020. There were 39 hedge funds in our database with GPK holdings at the end of the previous quarter. Our calculations also showed that GPK isn't among the 30 most popular stocks among hedge funds (click for Q1 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.
Hedge funds' reputation as shrewd investors has been tarnished in the last decade as their hedged returns couldn't keep up with the unhedged returns of the market indices. Our research was able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by more than 58 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 36% through May 18th. That's why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
[caption id="attachment_671014" align="aligncenter" width="397"] David Brown of Hawk Ridge Management[/caption]
At Insider Monkey we scour multiple sources to uncover the next great investment idea. There is a lot of volatility in the markets and this presents amazing investment opportunities from time to time. For example, this trader claims to deliver juiced up returns with one trade a week, so we are checking out his highest conviction idea. A second trader claims to score lucrative profits by utilizing a "weekend trading strategy", so we look into his strategy's picks. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. We recently recommended several stocks partly inspired by legendary Bill Miller's investor letter. Our best call in 2020 was shorting the market when the S&P 500 was trading at 3150 in February after realizing the coronavirus pandemic’s significance before most investors. Keeping this in mind we're going to take a gander at the new hedge fund action regarding Graphic Packaging Holding Company (NYSE:GPK).
What have hedge funds been doing with Graphic Packaging Holding Company (NYSE:GPK)?
At the end of the first quarter, a total of 33 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -15% from one quarter earlier. Below, you can check out the change in hedge fund sentiment towards GPK over the last 18 quarters. With the smart money's capital changing hands, there exists a few noteworthy hedge fund managers who were increasing their stakes considerably (or already accumulated large positions).
Of the funds tracked by Insider Monkey, Ken Griffin's Citadel Investment Group has the largest position in Graphic Packaging Holding Company (NYSE:GPK), worth close to $115.7 million, corresponding to 0.1% of its total 13F portfolio. The second most bullish fund manager is D E Shaw, led by D. E. Shaw, holding a $45.2 million position; the fund has 0.1% of its 13F portfolio invested in the stock. Remaining hedge funds and institutional investors with similar optimism contain Paul Marshall and Ian Wace's Marshall Wace LLP, Michael O'Keefe's 12th Street Asset Management and Cliff Asness's AQR Capital Management. In terms of the portfolio weights assigned to each position Anchor Bolt Capital allocated the biggest weight to Graphic Packaging Holding Company (NYSE:GPK), around 13.75% of its 13F portfolio. 12th Street Asset Management is also relatively very bullish on the stock, dishing out 9.36 percent of its 13F equity portfolio to GPK.
Due to the fact that Graphic Packaging Holding Company (NYSE:GPK) has experienced declining sentiment from the entirety of the hedge funds we track, we can see that there is a sect of hedge funds who were dropping their positions entirely by the end of the first quarter. Interestingly, Andrew Kurita's Kettle Hill Capital Management sold off the largest investment of all the hedgies tracked by Insider Monkey, totaling close to $35.9 million in stock, and James Dinan's York Capital Management was right behind this move, as the fund cut about $18.8 million worth. These moves are intriguing to say the least, as aggregate hedge fund interest fell by 6 funds by the end of the first quarter.
Let's check out hedge fund activity in other stocks similar to Graphic Packaging Holding Company (NYSE:GPK). These stocks are Neogen Corporation (NASDAQ:NEOG), Leggett & Platt, Inc. (NYSE:LEG), Adaptive Biotechnologies Corporation (NASDAQ:ADPT), and Alaska Air Group, Inc. (NYSE:ALK). This group of stocks' market caps match GPK's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position NEOG,16,33336,0 LEG,25,70786,-2 ADPT,18,1592264,-4 ALK,27,263441,-12 Average,21.5,489957,-4.5 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 21.5 hedge funds with bullish positions and the average amount invested in these stocks was $490 million. That figure was $340 million in GPK's case. Alaska Air Group, Inc. (NYSE:ALK) is the most popular stock in this table. On the other hand Neogen Corporation (NASDAQ:NEOG) is the least popular one with only 16 bullish hedge fund positions. Compared to these stocks Graphic Packaging Holding Company (NYSE:GPK) is more popular among hedge funds. 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 12.3% in 2020 through June 30th and still beat the market by 15.5 percentage points. Unfortunately GPK wasn't nearly as popular as these 10 stocks and hedge funds that were betting on GPK were disappointed as the stock returned 15.3% during the second quarter 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 in 2020.
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Disclosure: None. This article was originally published at Insider Monkey.