Concerns over rising interest rates and expected further rate increases have hit several stocks hard during the fourth quarter of 2018. Trends reversed 180 degrees during the first half of 2019 amid Powell's pivot and optimistic expectations towards a trade deal with China. Hedge funds and institutional investors tracked by Insider Monkey usually invest a disproportionate amount of their portfolios in smaller cap stocks. We have been receiving indications that hedge funds were increasing their overall exposure in the second quarter and this is one of the factors behind the recent movements in major indices. In this article, we will take a closer look at hedge fund sentiment towards AptarGroup, Inc. (NYSE:ATR).
AptarGroup, Inc. (NYSE:ATR) shareholders have witnessed an increase in hedge fund sentiment of late. Our calculations also showed that ATR isn't among the 30 most popular stocks among hedge funds (see the video below). Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.
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 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 25.7% through September 30, 2019. That's why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
Unlike this former hedge fund manager who is convinced Dow will soar past 40000, 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. Let's review the new hedge fund action surrounding AptarGroup, Inc. (NYSE:ATR).
What have hedge funds been doing with AptarGroup, Inc. (NYSE:ATR)?
At the end of the second quarter, a total of 20 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 33% from the first quarter of 2019. The graph below displays the number of hedge funds with bullish position in ATR over the last 16 quarters. So, let's review which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
According to publicly available hedge fund and institutional investor holdings data compiled by Insider Monkey, Chuck Royce's Royce & Associates has the number one position in AptarGroup, Inc. (NYSE:ATR), worth close to $24.5 million, corresponding to 0.2% of its total 13F portfolio. The second largest stake is held by Phill Gross and Robert Atchinson of Adage Capital Management, with a $21.8 million position; 0.1% of its 13F portfolio is allocated to the company. Some other hedge funds and institutional investors with similar optimism encompass Renaissance Technologies, Alexander Mitchell's Scopus Asset Management and Noam Gottesman's GLG Partners.
Consequently, some big names have been driving this bullishness. Adage Capital Management, managed by Phill Gross and Robert Atchinson, created the most outsized position in AptarGroup, Inc. (NYSE:ATR). Adage Capital Management had $21.8 million invested in the company at the end of the quarter. Alexander Mitchell's Scopus Asset Management also made a $9.3 million investment in the stock during the quarter. The other funds with brand new ATR positions are Richard Driehaus's Driehaus Capital, Minhua Zhang's Weld Capital Management, and Matthew Tewksbury's Stevens Capital Management.
Let's now take a look at hedge fund activity in other stocks - not necessarily in the same industry as AptarGroup, Inc. (NYSE:ATR) but similarly valued. We will take a look at HollyFrontier Corporation (NYSE:HFC), Alaska Air Group, Inc. (NYSE:ALK), Zayo Group Holdings Inc (NYSE:ZAYO), and Alnylam Pharmaceuticals, Inc. (NASDAQ:ALNY). This group of stocks' market valuations are closest to ATR's market valuation.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position HFC,25,596896,0 ALK,22,559529,2 ZAYO,59,1893644,-2 ALNY,35,957098,9 Average,35.25,1001792,2.25 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 35.25 hedge funds with bullish positions and the average amount invested in these stocks was $1002 million. That figure was $96 million in ATR's case. Zayo Group Holdings Inc (NYSE:ZAYO) is the most popular stock in this table. On the other hand Alaska Air Group, Inc. (NYSE:ALK) is the least popular one with only 22 bullish hedge fund positions. Compared to these stocks AptarGroup, Inc. (NYSE:ATR) is even less popular than ALK. Hedge funds dodged a bullet by taking a bearish stance towards ATR. Our calculations showed that the top 20 most popular hedge fund stocks returned 24.4% in 2019 through September 30th and outperformed the S&P 500 ETF (SPY) by 4 percentage points. Unfortunately ATR wasn't nearly as popular as these 20 stocks (hedge fund sentiment was very bearish); ATR investors were disappointed as the stock returned -4.5% during the third quarter 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 many of these stocks already outperformed the market so far in 2019.
Disclosure: None. This article was originally published at Insider Monkey.