How do we determine whether Berry Global Group Inc (NYSE:BERY) makes for a good investment at the moment? We analyze the sentiment of a select group of the very best investors in the world, who spend immense amounts of time and resources studying companies. They may not always be right (no one is), but data shows that their consensus long positions have historically outperformed the market when we adjust for known risk factors.
Is Berry Global Group Inc (NYSE:BERY) a bargain? Hedge funds are getting less bullish. The number of long hedge fund positions shrunk by 3 recently. Our calculations also showed that bery isn't among the 30 most popular stocks among hedge funds. BERY was in 40 hedge funds' portfolios at the end of the first quarter of 2019. There were 43 hedge funds in our database with BERY holdings at the end of the previous quarter.
Why do we pay any attention at all to hedge fund sentiment? 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 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'll significantly underperform the market. We have been tracking and sharing the list of these stocks since February 2017 and they lost 30.9% through May 30, 2019. That's why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
Let's review the latest hedge fund action regarding Berry Global Group Inc (NYSE:BERY).
What have hedge funds been doing with Berry Global Group Inc (NYSE:BERY)?
Heading into the second quarter of 2019, a total of 40 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -7% from the fourth quarter of 2018. Below, you can check out the change in hedge fund sentiment towards BERY over the last 15 quarters. So, let's examine which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
The largest stake in Berry Global Group Inc (NYSE:BERY) was held by Eminence Capital, which reported holding $592.9 million worth of stock at the end of March. It was followed by Viking Global with a $416 million position. Other investors bullish on the company included Canyon Capital Advisors, Orbis Investment Management, and Sachem Head Capital.
Due to the fact that Berry Global Group Inc (NYSE:BERY) has experienced bearish sentiment from the entirety of the hedge funds we track, it's safe to say that there lies a certain "tier" of fund managers that decided to sell off their full holdings by the end of the third quarter. Intriguingly, Phill Gross and Robert Atchinson's Adage Capital Management cut the largest stake of the "upper crust" of funds tracked by Insider Monkey, totaling close to $133.1 million in stock. Peter Rathjens, Bruce Clarke and John Campbell's fund, Arrowstreet Capital, also dumped its stock, about $20.7 million worth. These bearish behaviors are intriguing to say the least, as total hedge fund interest was cut by 3 funds by the end of the third quarter.
Let's go over hedge fund activity in other stocks similar to Berry Global Group Inc (NYSE:BERY). We will take a look at Carlisle Companies, Inc. (NYSE:CSL), Charles River Laboratories International Inc. (NYSE:CRL), The Madison Square Garden Company (NYSE:MSG), and East West Bancorp, Inc. (NASDAQ:EWBC). All of these stocks' market caps match BERY's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position CSL,22,251859,1 CRL,24,994211,-4 MSG,52,1778621,6 EWBC,29,437635,2 Average,31.75,865582,1.25 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 31.75 hedge funds with bullish positions and the average amount invested in these stocks was $866 million. That figure was $2602 million in BERY's case. The Madison Square Garden Company (NYSE:MSG) is the most popular stock in this table. On the other hand Carlisle Companies, Inc. (NYSE:CSL) is the least popular one with only 22 bullish hedge fund positions. Berry Global Group Inc (NYSE:BERY) is not the most popular stock in this group but hedge fund interest is still above average. This is a slightly positive signal but we'd rather spend our time researching stocks that hedge funds are piling on. Our calculations showed that top 20 most popular stocks among hedge funds returned 1.9% in Q2 through May 30th and outperformed the S&P 500 ETF (SPY) by more than 3 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 -12.3% during the same period 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 13 of these stocks already outperformed the market so far in Q2.
Disclosure: None. This article was originally published at Insider Monkey.