After several tireless days we have finished crunching the numbers from nearly 750 13F filings issued by the elite hedge funds and other investment firms that we track at Insider Monkey, which disclosed those firms' equity portfolios as of March 31. The results of that effort will be put on display in this article, as we share valuable insight into the smart money sentiment towards Sonoco Products Company (NYSE:SON).
Hedge fund interest in Sonoco Products Company (NYSE:SON) 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 Cullen/Frost Bankers, Inc. (NYSE:CFR), Macerich Company (NYSE:MAC), and Parsley Energy Inc (NYSE:PE) to gather more data points.
At the moment there are a large number of tools stock market investors have at their disposal to evaluate stocks. Two of the most innovative tools are hedge fund and insider trading sentiment. Our experts have shown that, historically, those who follow the best picks of the best hedge fund managers can beat their index-focused peers by a solid margin (see the details here).
[caption id="attachment_758454" align="aligncenter" width="450"] James Dondero of Highland Capital Management[/caption]
We're going to analyze the key hedge fund action regarding Sonoco Products Company (NYSE:SON).
How are hedge funds trading Sonoco Products Company (NYSE:SON)?
At the end of the first quarter, a total of 17 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 0% from the fourth quarter of 2018. Below, you can check out the change in hedge fund sentiment towards SON over the last 15 quarters. With hedge funds' capital changing hands, there exists a select group of notable hedge fund managers who were boosting their holdings meaningfully (or already accumulated large positions).
More specifically, Impax Asset Management was the largest shareholder of Sonoco Products Company (NYSE:SON), with a stake worth $30.1 million reported as of the end of March. Trailing Impax Asset Management was AQR Capital Management, which amassed a stake valued at $21.8 million. Royce & Associates, Citadel Investment Group, and GAMCO Investors were also very fond of the stock, giving the stock large weights in their portfolios.
Since Sonoco Products Company (NYSE:SON) has witnessed bearish sentiment from the smart money, logic holds that there lies a certain "tier" of funds that decided to sell off their positions entirely heading into Q3. Intriguingly, Israel Englander's Millennium Management said goodbye to the biggest investment of all the hedgies watched by Insider Monkey, valued at an estimated $4.3 million in stock, and Joel Greenblatt's Gotham Asset Management was right behind this move, as the fund dropped about $2 million worth. These transactions are intriguing to say the least, as aggregate hedge fund interest stayed the same (this is a bearish signal in our experience).
Let's now take a look at hedge fund activity in other stocks - not necessarily in the same industry as Sonoco Products Company (NYSE:SON) but similarly valued. These stocks are Cullen/Frost Bankers, Inc. (NYSE:CFR), Macerich Company (NYSE:MAC), Parsley Energy Inc (NYSE:PE), and Helmerich & Payne, Inc. (NYSE:HP). This group of stocks' market caps resemble SON's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position CFR,18,65975,0 MAC,22,298493,-3 PE,34,849803,-2 HP,31,399271,4 Average,26.25,403386,-0.25 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 26.25 hedge funds with bullish positions and the average amount invested in these stocks was $403 million. That figure was $109 million in SON's case. Parsley Energy Inc (NYSE:PE) is the most popular stock in this table. On the other hand Cullen/Frost Bankers, Inc. (NYSE:CFR) is the least popular one with only 18 bullish hedge fund positions. Compared to these stocks Sonoco Products Company (NYSE:SON) is even less popular than CFR. Hedge funds clearly dropped the ball on SON as the stock delivered strong returns, though hedge funds' consensus picks still generated respectable returns. Our calculations showed that top 20 most popular stocks among hedge funds returned 6.2% in Q2 through June 19th and outperformed the S&P 500 ETF (SPY) by nearly 3 percentage points. A small number of hedge funds were also right about betting on SON as the stock returned 6.8% during the same period and outperformed the market by an even larger margin.
Disclosure: None. This article was originally published at Insider Monkey.