Coronavirus is probably the #1 concern in investors’ minds right now. It should be. On February 27th we published this article and predicted that a US recession is imminent and US stocks will go down by at least 20% in the next 3-6 months. We also told you to short the market ETFs and buy long-term bonds. Investors who agreed with us and replicated these trades are up double digits whereas the market is down double digits. In these volatile markets we scrutinize hedge fund filings to get a reading on which direction each stock might be going. The financial regulations require hedge funds and wealthy investors that exceeded the $100 million equity holdings threshold to file a report that shows their positions at the end of every quarter. Even though it isn't the intention, these filings to a certain extent level the playing field for ordinary investors. The latest round of 13F filings disclosed the funds' positions on December 31st. We at Insider Monkey have made an extensive database of more than 835 of those established hedge funds and famous value investors' filings. In this article, we analyze how these elite funds and prominent investors traded Berry Global Group Inc (NYSE:BERY) based on those filings.
Berry Global Group Inc (NYSE:BERY) was in 47 hedge funds' portfolios at the end of the fourth quarter of 2019. BERY shareholders have witnessed an increase in hedge fund sentiment in recent months. There were 43 hedge funds in our database with BERY holdings at the end of the previous quarter. Our calculations also showed that BERY isn't among the 30 most popular stocks among hedge funds (click for Q4 rankings and see the video below for Q3 rankings). Video: Click the image to 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 more than 41 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 35.3% through March 3rd. That's why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
[caption id="attachment_339739" align="aligncenter" width="400"] Ricky Sandler of Eminence Capital[/caption]
We leave no stone unturned when looking for the next great investment idea. For example Europe is set to become the world’s largest cannabis market, so we check out this European marijuana stock pitch. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences, and and go through short-term trade recommendations like this one. We even check out the recommendations of services with hard to believe track records. In January, we recommended a long position in one of the most shorted stocks in the market, and that stock returned more than 50% despite the large losses in the market since our recommendation. With all of this in mind we're going to take a peek at the latest hedge fund action encompassing Berry Global Group Inc (NYSE:BERY).
Hedge fund activity in Berry Global Group Inc (NYSE:BERY)
Heading into the first quarter of 2020, a total of 47 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 9% from one quarter earlier. Below, you can check out the change in hedge fund sentiment towards BERY over the last 18 quarters. With hedgies' capital changing hands, there exists a select group of key hedge fund managers who were upping their holdings significantly (or already accumulated large positions).
More specifically, Eminence Capital was the largest shareholder of Berry Global Group Inc (NYSE:BERY), with a stake worth $562.2 million reported as of the end of September. Trailing Eminence Capital was Canyon Capital Advisors, which amassed a stake valued at $366.6 million. Orbis Investment Management, Two Creeks Capital Management, and Luminus Management were also very fond of the stock, becoming one of the largest hedge fund holders of the company. In terms of the portfolio weights assigned to each position SCW Capital Management allocated the biggest weight to Berry Global Group Inc (NYSE:BERY), around 11.22% of its 13F portfolio. Anchor Bolt Capital is also relatively very bullish on the stock, dishing out 9.37 percent of its 13F equity portfolio to BERY.
As one would reasonably expect, key hedge funds were breaking ground themselves. Appian Way Asset Management, managed by Andrew Byington, established the most valuable position in Berry Global Group Inc (NYSE:BERY). Appian Way Asset Management had $15.4 million invested in the company at the end of the quarter. Sander Gerber's Hudson Bay Capital Management also initiated a $12.3 million position during the quarter. The following funds were also among the new BERY investors: Joseph Samuels's Islet Management, Jay Genzer's Thames Capital Management, and Ira Unschuld's Brant Point Investment Management.
Let's check out hedge fund activity in other stocks similar to Berry Global Group Inc (NYSE:BERY). We will take a look at United Microelectronics Corp (NYSE:UMC), Healthcare Trust Of America Inc (NYSE:HTA), Dunkin Brands Group Inc (NASDAQ:DNKN), and Wix.Com Ltd (NASDAQ:WIX). This group of stocks' market valuations resemble BERY's market valuation.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position UMC,14,124868,1 HTA,11,186628,-9 DNKN,31,272021,3 WIX,34,1072887,1 Average,22.5,414101,-1 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 22.5 hedge funds with bullish positions and the average amount invested in these stocks was $414 million. That figure was $1624 million in BERY's case. Wix.Com Ltd (NASDAQ:WIX) is the most popular stock in this table. On the other hand Healthcare Trust Of America Inc (NYSE:HTA) is the least popular one with only 11 bullish hedge fund positions. Compared to these stocks Berry Global Group Inc (NYSE:BERY) is more popular among hedge funds. 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 10.1 percentage points. These stocks lost 12.9% in 2020 through March 9th and still beat the market by 1.9 percentage points. Unfortunately BERY wasn't nearly as popular as these 20 stocks and hedge funds that were betting on BERY were disappointed as the stock returned -33% during the first two months of 2020 (through March 9th) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 20 most popular stocks among hedge funds as most of these stocks already outperformed the market in Q1.
Disclosure: None. This article was originally published at Insider Monkey.