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Were Hedge Funds Right About Berry Global Group Inc (BERY)?

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We know that hedge funds generate strong, risk-adjusted returns over the long run, which is why imitating the picks that they are collectively bullish on can be a profitable strategy for retail investors. With billions of dollars in assets, professional investors have to conduct complex analyses, spend many resources and use tools that are not always available for the general crowd. This doesn't mean that they don't have occasional colossal losses; they do. However, it is still a good idea to keep an eye on hedge fund activity. With this in mind, let’s examine the smart money sentiment towards Berry Global Group Inc (NYSE:BERY) and determine whether hedge funds skillfully traded this stock.

Berry Global Group Inc (NYSE:BERY) has experienced an increase in hedge fund interest lately. Berry Global Group Inc (NYSE:BERY) was in 39 hedge funds' portfolios at the end of September. The all time high for this statistic is 53. There were 37 hedge funds in our database with BERY holdings at the end of June. Our calculations also showed that BERY isn't among the 30 most popular stocks among hedge funds (click for Q3 rankings).

At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, lithium prices have more than doubled over the past year, so we go through lists like the 10 best EV 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. With all of this in mind let's take a look at the new hedge fund action regarding Berry Global Group Inc (NYSE:BERY).

Josh Friedman Canyon Capital
Josh Friedman Canyon Capital

Joshua Friedman of Canyon Capital Advisors

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

At Q3's end, a total of 39 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 5% from one quarter earlier. On the other hand, there were a total of 43 hedge funds with a bullish position in BERY 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.

When looking at the institutional investors followed by Insider Monkey, Ricky Sandler's Eminence Capital has the biggest position in Berry Global Group Inc (NYSE:BERY), worth close to $256.1 million, accounting for 3.5% of its total 13F portfolio. Coming in second is Lyrical Asset Management, managed by Andrew Wellington and Jeff Keswin, which holds a $160.2 million position; the fund has 2.1% of its 13F portfolio invested in the stock. Remaining members of the smart money that hold long positions consist of Joshua Friedman and Mitchell Julis's Canyon Capital Advisors, Ryan Pedlow's Two Creeks Capital Management and Thomas E. Claugus's GMT Capital. In terms of the portfolio weights assigned to each position Monarch Alternative Capital allocated the biggest weight to Berry Global Group Inc (NYSE:BERY), around 17.15% of its 13F portfolio. Bayberry Capital Partners is also relatively very bullish on the stock, dishing out 12.63 percent of its 13F equity portfolio to BERY.

As industrywide interest jumped, key money managers have jumped into Berry Global Group Inc (NYSE:BERY) headfirst. Appian Way Asset Management, managed by Andrew Byington, assembled the biggest position in Berry Global Group Inc (NYSE:BERY). Appian Way Asset Management had $16.3 million invested in the company at the end of the quarter. Jinghua Yan's TwinBeech Capital also initiated a $1.9 million position during the quarter. The other funds with brand new BERY positions are Greg Eisner's Engineers Gate Manager, D. E. Shaw's D E Shaw, and Peter Algert's Algert Global.

Let's go over hedge fund activity in other stocks similar to Berry Global Group Inc (NYSE:BERY). We will take a look at Aspen Technology, Inc. (NASDAQ:AZPN), Zynga Inc (NASDAQ:ZNGA), The Western Union Company (NYSE:WU), Sealed Air Corporation (NYSE:SEE), Under Armour Inc (NYSE:UA), Rexford Industrial Realty Inc (NYSE:REXR), and Phillips 66 Partners LP (NYSE:PSXP). All of these stocks' market caps are closest to BERY's market cap.

[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position AZPN,20,620030,-3 ZNGA,52,603900,3 WU,27,234768,-4 SEE,33,626876,5 UA,48,1643556,-3 REXR,29,358442,8 PSXP,5,31682,0 Average,30.6,588465,0.9 [/table]

View table here if you experience formatting issues.

As you can see these stocks had an average of 30.6 hedge funds with bullish positions and the average amount invested in these stocks was $588 million. That figure was $1246 million in BERY's case. Zynga Inc (NASDAQ:ZNGA) is the most popular stock in this table. On the other hand Phillips 66 Partners LP (NYSE:PSXP) is the least popular one with only 5 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. Our overall hedge fund sentiment score for BERY is 65.2. 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. 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 29.6% in 2021 and still beat the market by 3.6 percentage points. Hedge funds were also right about betting on BERY as the stock returned 10.7% since the end of Q3 (through 1/31) and outperformed the market. Hedge funds were rewarded for their relative bullishness.

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Disclosure: None. This article was originally published at Insider Monkey.