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Do Hedge Funds Love Ball Corporation (BLL)?

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·6 min read
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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.

Is Ball Corporation (NYSE:BLL) a buy here? Hedge funds were taking a bearish view. The number of bullish hedge fund bets shrunk by 6 recently. Ball Corporation (NYSE:BLL) was in 38 hedge funds' portfolios at the end of March. The all time high for this statistic is 44. Our calculations also showed that BLL isn't among the 30 most popular stocks among hedge funds (click for Q1 rankings). There were 44 hedge funds in our database with BLL positions at the end of the fourth quarter.

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. Hedge funds have more than $3.5 trillion in assets under management, so you can't expect their entire portfolios to beat the market by large margins. 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 115 percentage points since March 2017 (see the details here). So you can still find a lot of gems by following hedge funds' moves today.


Louis Bacon Moore of Moore Capital

At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, lithium mining is one of the fastest growing industries right now, so we are checking out stock pitches like this emerging lithium stock. We go through lists like the 10 best battery 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. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. You can subscribe to our free daily newsletter on our homepage. Keeping this in mind we're going to review the new hedge fund action encompassing Ball Corporation (NYSE:BLL).

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

At the end of March, a total of 38 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -14% from the previous quarter. The graph below displays the number of hedge funds with bullish position in BLL over the last 23 quarters. With the smart money's positions undergoing their usual ebb and flow, there exists a few notable hedge fund managers who were adding to their stakes considerably (or already accumulated large positions).

Is BLL A Good Stock To Buy?
Is BLL A Good Stock To Buy?

According to Insider Monkey's hedge fund database, Daniel Sundheim's D1 Capital Partners has the most valuable position in Ball Corporation (NYSE:BLL), worth close to $370.7 million, accounting for 2.7% of its total 13F portfolio. The second largest stake is held by Richard Chilton of Chilton Investment Company, with a $276.2 million position; the fund has 7.6% of its 13F portfolio invested in the stock. Other hedge funds and institutional investors that hold long positions contain David Cohen and Harold Levy's Iridian Asset Management, Israel Englander's Millennium Management and Greg Poole's Echo Street Capital Management. In terms of the portfolio weights assigned to each position Chilton Investment Company allocated the biggest weight to Ball Corporation (NYSE:BLL), around 7.6% of its 13F portfolio. Bluegrass Capital Partners is also relatively very bullish on the stock, dishing out 5.01 percent of its 13F equity portfolio to BLL.

Judging by the fact that Ball Corporation (NYSE:BLL) has witnessed bearish sentiment from the smart money, logic holds that there was a specific group of money managers that elected to cut their full holdings in the first quarter. At the top of the heap, Kenneth Tropin's Graham Capital Management said goodbye to the largest position of the 750 funds monitored by Insider Monkey, worth close to $14 million in stock, and James Dinan's York Capital Management was right behind this move, as the fund sold off about $9.7 million worth. These moves are intriguing to say the least, as total hedge fund interest was cut by 6 funds in the first quarter.

Let's now review hedge fund activity in other stocks - not necessarily in the same industry as Ball Corporation (NYSE:BLL) but similarly valued. These stocks are Lennar Corporation (NYSE:LEN), Teladoc Health, Inc (NYSE:TDOC), The Kroger Co. (NYSE:KR), American Water Works Company, Inc. (NYSE:AWK), Ameriprise Financial, Inc. (NYSE:AMP), Tyson Foods, Inc. (NYSE:TSN), and RingCentral Inc (NYSE:RNG). This group of stocks' market valuations match BLL's market valuation.

[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position LEN,49,1570352,-3 TDOC,42,3372133,-8 KR,35,3155231,-1 AWK,30,1109517,-6 AMP,37,969834,3 TSN,28,761852,-10 RNG,51,3249906,-12 Average,38.9,2026975,-5.3 [/table]

View table here if you experience formatting issues.

As you can see these stocks had an average of 38.9 hedge funds with bullish positions and the average amount invested in these stocks was $2027 million. That figure was $1407 million in BLL's case. RingCentral Inc (NYSE:RNG) is the most popular stock in this table. On the other hand Tyson Foods, Inc. (NYSE:TSN) is the least popular one with only 28 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 46.6. 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 19.3% in 2021 through June 25th and surpassed the market again by 4.8 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 -2.1% since the end of March (through 6/25) 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.