Before we spend countless hours researching a company, we like to analyze what insiders, hedge funds and billionaire investors think of the stock first. This is a necessary first step in our investment process because our research has shown that the elite investors' consensus returns have been exceptional. In the following paragraphs, we find out what the billionaire investors and hedge funds think of Ball Corporation (NYSE:BLL).
Hedge fund interest in Ball Corporation (NYSE:BLL) shares was flat at the end of last quarter. This is usually a negative indicator. The level and the change in hedge fund popularity aren't the only variables you need to analyze to decipher hedge funds' perspectives. A stock may witness a boost in popularity but it may still be less popular than similarly priced stocks. That's why at the end of this article we will examine companies such as Zimmer Biomet Holdings Inc (NYSE:ZBH), Agilent Technologies Inc. (NYSE:A), and IDEXX Laboratories, Inc. (NASDAQ:IDXX) to gather more data points.
So, why do we pay attention to hedge fund sentiment before making any investment decisions? 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 market by 40 percentage points since May 2014 through May 30, 2019 (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. Even if you aren't comfortable with shorting stocks, you should at least avoid initiating long positions in our short portfolio.
Unlike some fund managers who are betting on Dow reaching 40000 in a year, our long-short investment strategy doesn't rely on bull markets to deliver double digit returns. We only rely on hedge fund buy/sell signals. We're going to take a look at the new hedge fund action regarding Ball Corporation (NYSE:BLL).
Hedge fund activity in Ball Corporation (NYSE:BLL)
Heading into the third quarter of 2019, a total of 27 of the hedge funds tracked by Insider Monkey were long this stock, a change of 0% from one quarter earlier. On the other hand, there were a total of 20 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.
Of the funds tracked by Insider Monkey, Chilton Investment Company, managed by Richard Chilton, holds the most valuable position in Ball Corporation (NYSE:BLL). Chilton Investment Company has a $210.6 million position in the stock, comprising 6.9% of its 13F portfolio. On Chilton Investment Company's heels is Iridian Asset Management, led by David Cohen and Harold Levy, holding a $175.2 million position; the fund has 2.5% of its 13F portfolio invested in the stock. Some other peers that are bullish comprise John Overdeck and David Siegel's Two Sigma Advisors, Robert Joseph Caruso's Select Equity Group and Matthew Hulsizer's PEAK6 Capital Management.
Since Ball Corporation (NYSE:BLL) has faced bearish sentiment from the entirety of the hedge funds we track, logic holds that there lies a certain "tier" of hedgies that elected to cut their full holdings heading into Q3. Interestingly, Bain Capital's Brookside Capital sold off the biggest stake of the "upper crust" of funds tracked by Insider Monkey, comprising about $34.2 million in stock. Phill Gross and Robert Atchinson's fund, Adage Capital Management, also sold off its stock, about $12.7 million worth. These transactions are important to note, as aggregate hedge fund interest stayed the same (this is a bearish signal in our experience).
Let's also examine hedge fund activity in other stocks similar to Ball Corporation (NYSE:BLL). We will take a look at Zimmer Biomet Holdings Inc (NYSE:ZBH), Agilent Technologies Inc. (NYSE:A), IDEXX Laboratories, Inc. (NASDAQ:IDXX), and DTE Energy Company (NYSE:DTE). All of these stocks' market caps match BLL's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position ZBH,42,1424896,7 A,39,1826200,-2 IDXX,37,711119,8 DTE,28,664329,3 Average,36.5,1156636,4 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 36.5 hedge funds with bullish positions and the average amount invested in these stocks was $1157 million. That figure was $669 million in BLL's case. Zimmer Biomet Holdings Inc (NYSE:ZBH) is the most popular stock in this table. On the other hand DTE Energy Company (NYSE:DTE) is the least popular one with only 28 bullish hedge fund positions. Compared to these stocks Ball Corporation (NYSE:BLL) is even less popular than DTE. Our calculations showed that top 20 most popular stocks among hedge funds returned 24.4% in 2019 through September 30th and outperformed the S&P 500 ETF (SPY) by 4 percentage points. A small number of hedge funds were also right about betting on BLL, though not to the same extent, as the stock returned 4.2% during the third quarter and outperformed the market as well. Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.
Disclosure: None. This article was originally published at Insider Monkey.