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Hedge Funds Flocked Into Ball Corporation (BLL) and Here’s What Happened Next

Reymerlyn Martin

Hedge funds and large money managers usually invest with a focus on the long-term horizon and, therefore, short-lived dips on the charts, usually don't make them change their opinion towards a company. This time it may be different. During the fourth quarter of 2018 we observed increased volatility and small-cap stocks underperformed the market. Hedge fund investor letters indicated that they are cutting their overall exposure, closing out some position and doubling down on others. Let’s take a look at the hedge fund sentiment towards Ball Corporation (NYSE:BLL) to find out whether it was one of their high conviction long-term ideas.

Is Ball Corporation (NYSE:BLL) the right investment to pursue these days? Money managers are becoming hopeful. The number of bullish hedge fund positions advanced by 13 lately. That's a very large increase for a stock that had only 20 hedge funds with bullish positions at the end of September.

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' large-cap stock picks indeed failed to beat the market between 1999 and 2016. However, we were able to identify in advance a select group of hedge fund holdings that outperformed the market by 32 percentage points since May 2014 through March 12, 2019 (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 27.5% through March 12, 2019. That's why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.

CHILTON INVESTMENT COMPANY

We're going to take a peek at the new hedge fund action regarding Ball Corporation (NYSE:BLL).

What does the smart money think about Ball Corporation (NYSE:BLL)?

At the end of the fourth quarter, a total of 33 of the hedge funds tracked by Insider Monkey were long this stock, a change of 65% from one quarter earlier. On the other hand, there were a total of 27 hedge funds with a bullish position in BLL a year ago. So, let's review which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

BLL_mar2019

The largest stake in Ball Corporation (NYSE:BLL) was held by Rivulet Capital, which reported holding $156.8 million worth of stock at the end of September. It was followed by Chilton Investment Company with a $146.5 million position. Other investors bullish on the company included Iridian Asset Management, Brookside Capital, and Citadel Investment Group.

As aggregate interest increased, key money managers were leading the bulls' herd. SAYA Management, managed by Anand More, created the most outsized position in Ball Corporation (NYSE:BLL). SAYA Management had $24 million invested in the company at the end of the quarter. David Costen Haley's HBK Investments also made a $5.8 million investment in the stock during the quarter. The other funds with new positions in the stock are Andrew Feldstein and Stephen Siderow's Blue Mountain Capital, Jim Simons's Renaissance Technologies, and Matthew Hulsizer's PEAK6 Capital Management.

Let's go over hedge fund activity in other stocks similar to Ball Corporation (NYSE:BLL). We will take a look at Liberty Global Plc (NASDAQ:LBTYK), Splunk Inc (NASDAQ:SPLK), Avangrid, Inc. (NYSE:AGR), and Fifth Third Bancorp (NASDAQ:FITB). All of these stocks' market caps are similar to BLL's market cap.

[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position LBTYK,32,2957690,-9 SPLK,25,466083,-14 AGR,13,347814,-5 FITB,31,775233,7 Average,25.25,1136705,-5.25 [/table]

View table here if you experience formatting issues.

As you can see these stocks had an average of 25.25 hedge funds with bullish positions and the average amount invested in these stocks was $1137 million. That figure was $628 million in BLL's case. Liberty Global Plc (NASDAQ:LBTYK) is the most popular stock in this table. On the other hand Avangrid, Inc. (NYSE:AGR) is the least popular one with only 13 bullish hedge fund positions. Compared to these stocks Ball Corporation (NYSE:BLL) is more popular among hedge funds. The large increase in hedge fund sentiment by the end of the fourth quarter lifted BLL above all of its market cap peers. Our calculations showed that top 15 most popular stocks among hedge funds returned 19.7% through March 15th and outperformed the S&P 500 ETF (SPY) by 6.6 percentage points. Hedge funds were also right about betting on BLL as the stock returned 25.3% and outperformed the market as well.

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

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