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In this article we will check out the progression of hedge fund sentiment towards Ranpak Holdings Corp (NYSE:PACK) and determine whether it is a good investment right now. We at Insider Monkey like to examine what billionaires and hedge funds think of a company before spending days of research on it. Given their 2 and 20 payment structure, hedge funds have more incentives and resources than the average investor. The funds have access to expert networks and get tips from industry insiders. They also employ numerous Ivy League graduates and MBAs. Like everyone else, hedge funds perform miserably at times, but their consensus picks have historically outperformed the market after risk adjustments.
Is Ranpak Holdings Corp (NYSE:PACK) a buy right now? The best stock pickers are taking a bearish view. The number of long hedge fund positions were cut by 3 recently. Our calculations also showed that PACK 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 has shown that hedge funds' small-cap stock picks managed to beat the market by double digits annually between 1999 and 2016, but the margin of outperformance has been declining in recent years. Nevertheless, we were still able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by 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 underperformed the market by 10 percentage points annually between 2006 and 2017. Interestingly the margin of underperformance of these stocks has been increasing in recent years. Investors who are long the market and short these stocks would have returned more than 27% annually between 2015 and 2017. We have been tracking and sharing the list of these stocks since February 2017 in our quarterly newsletter.
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Wall Street Bull[/caption]
At Insider Monkey we scour multiple sources to uncover the next great investment idea. For example, blockchain technology's influence will go beyond online payments. So, we are checking out this futurist's moonshot opportunities in tech stocks. We interview hedge fund managers and ask them about their best ideas. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. For example we are checking out stocks recommended/scorned by legendary Bill Miller. 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. With all of this in mind we're going to take a peek at the new hedge fund action encompassing Ranpak Holdings Corp (NYSE:PACK).
How are hedge funds trading Ranpak Holdings Corp (NYSE:PACK)?
At the end of the first quarter, a total of 14 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -18% from one quarter earlier. Below, you can check out the change in hedge fund sentiment towards PACK over the last 18 quarters. So, let's review which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
According to Insider Monkey's hedge fund database, JS Capital, managed by Jonathan Soros, holds the number one position in Ranpak Holdings Corp (NYSE:PACK). JS Capital has a $182.8 million position in the stock, comprising 23% of its 13F portfolio. On JS Capital's heels is Millennium Management, managed by Israel Englander, which holds a $53.8 million call position; the fund has 0.1% of its 13F portfolio invested in the stock. Other professional money managers with similar optimism comprise Jonathan Soros's JS Capital, Christopher Shackelton and Adam Gray's Coliseum Capital and Joshua Nash's Ulysses Management. In terms of the portfolio weights assigned to each position JS Capital allocated the biggest weight to Ranpak Holdings Corp (NYSE:PACK), around 23% of its 13F portfolio. Coliseum Capital is also relatively very bullish on the stock, dishing out 5.63 percent of its 13F equity portfolio to PACK.
Since Ranpak Holdings Corp (NYSE:PACK) has faced falling interest from the entirety of the hedge funds we track, it's easy to see that there exists a select few fund managers that decided to sell off their full holdings last quarter. Interestingly, Joseph Samuels's Islet Management dumped the largest stake of all the hedgies watched by Insider Monkey, valued at close to $1.6 million in stock, and Michael Platt and William Reeves's BlueCrest Capital Mgmt. was right behind this move, as the fund dumped about $1 million worth. These bearish behaviors are important to note, as total hedge fund interest was cut by 3 funds last quarter.
Let's check out hedge fund activity in other stocks similar to Ranpak Holdings Corp (NYSE:PACK). We will take a look at Foundation Building Materials, Inc. (NYSE:FBM), ArcBest Corp (NASDAQ:ARCB), RPC, Inc. (NYSE:RES), and Provention Bio, Inc. (NASDAQ:PRVB). All of these stocks' market caps are similar to PACK's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position FBM,12,44726,-9 ARCB,11,41768,-2 RES,11,14862,-2 PRVB,8,38816,-1 Average,10.5,35043,-3.5 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 10.5 hedge funds with bullish positions and the average amount invested in these stocks was $35 million. That figure was $254 million in PACK's case. Foundation Building Materials, Inc. (NYSE:FBM) is the most popular stock in this table. On the other hand Provention Bio, Inc. (NASDAQ:PRVB) is the least popular one with only 8 bullish hedge fund positions. Compared to these stocks Ranpak Holdings Corp (NYSE:PACK) 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 13.3% in 2020 through June 25th but still managed to beat the market by 16.8 percentage points. Hedge funds were also right about betting on PACK, though not to the same extent, as the stock returned 21.7% in Q2 (through June 25th) and outperformed the market as well.
Disclosure: None. This article was originally published at Insider Monkey.