We recently compiled a list of the 8 Dividend Giants with Lowest Short Interest in 2024. In this article, we are going to take a look at where Amcor plc (NYSE:AMCR) stands against the other dividend giants with lowest short interest.
Short sellers have faced significant challenges over the past few years, as the market’s ongoing rally has not been favorable to them, with 2023 being no exception. According to S3 Partners Research, investors betting against US and Canadian stocks incurred paper losses totaling $194.9 billion last year due to a sharp market rally. The report highlighted that 2023 was a particularly tough year for short sellers, with tech stocks soaring 43.4% and the broader market rising 24.2%. Despite the difficulties, some investors managed to profit from short positions, particularly during the banking crisis in March last year.
Short selling is a common and regulated investment strategy that investors use when they believe a stock is overpriced based on their research. It enhances market liquidity, contributes to market stability, and helps both investors and companies manage risk in their portfolios.
Short selling isn’t just used for excitement; it plays a key role in improving price accuracy, ensuring more efficient capital allocation, preventing financial bubbles, and revealing fraud. According to a report by the Washington-based Managed Funds Association, short selling signaled that the US housing market was overvalued in 2008, helping to limit the broader impact of the financial crisis. The report also mentioned that over the past two decades, short selling has exposed numerous corporate frauds, including cases like Enron, Tyco, Worldcom, MBIA, Insys Therapeutics, Valeant, and Wirecard, among others.
In August, short sellers focused their attention on airlines due to increasing concerns about the sector, which has been experiencing declines in earnings and rising costs, according to a report from data and technology firm Hazeltree. Some investors and analysts believe that the airline industry, which is cyclical and closely linked to macroeconomic conditions, may be heading for another downturn as travel demand normalizes after COVID-19 and consumers become more sensitive to pricing. The Hazeltree report also noted that traders made bets against banks during the same month.
Short sellers have clearly identified opportunities in neglected or struggling segments of the market. Last year, the instability among regional banks drew the attention of short sellers, who examined these lenders’ balance sheets for weaknesses related to rising interest rates and took positions against their stocks. In 2023, while the overall market was on an upward trend, this sector proved to be particularly lucrative for these traders. The volatility experienced by regional bank stocks earlier this year once again led to significant paper profits for short sellers, mirroring the gains achieved during last year’s disruptions in the sector. As a result, analysts are reassessing their view of short sellers. Carson Block, founder of Muddy Waters Research, believes that markets are increasingly reliant on short sellers. However, he pointed out that ongoing stock rallies and emerging regulatory hurdles are posing challenges for bearish investors, making it harder for them to secure capital. With this, we will take a look at some dividend giants with the lowest short interest.
Our Methodology:
To create this list, we used the Finviz stock screener to find dividend stocks with a market capitalization of at least $10 billion and dividend yields exceeding 3% as of September 22. We then narrowed down the selection to stocks with less than 3% of their float sold short, using data from Yahoo Finance recorded on September 22. The stocks are arranged in descending order based on their short interest rates.
We also measured hedge fund sentiment around each stock according to Insider Monkey’s database of 912 funds as of Q2 2024. Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 275% since May 2014, beating its benchmark by 150 percentage points. (see more details here).
An automated assembly line producing a variety of packaging products.
Amcor plc (NYSE:AMCR)
Short % of Float as of September 22: 1.61%
Amcor plc (NYSE:AMCR) is a global multinational packaging company that offers a wide range of related products for different industries. The company has demonstrated global resilience throughout its history. Founded in the 1860s as Australian Paper Manufacturers, it has evolved significantly over the years. In 2000, the company shifted its focus by selling off its paper goods business. Since then, Amcor has grown through a series of strategic acquisitions, including the $7 billion acquisition of Bemis in 2019, which helped establish its leadership in the global packaging industry.
Amcor plc (NYSE:AMCR) ended fiscal 2024 on a strong note, with its core business showing continued sequential improvement in both volume and earnings growth. Fourth-quarter adjusted EPS rose by 9%, surpassing the company’s April expectations. Volumes saw year-over-year growth as customer demand strengthened, while the team remained focused on cost management, leading to significant margin expansion. In addition, annual adjusted free cash flow was at the high end of the projected range, increasing by 12% compared to the previous year. In fiscal Q4 2024, the company reported revenue of $3.54 billion, which fell slightly by 3.7% from the same period last year.
Amcor plc (NYSE:AMCR) is a strong dividend payer as the company has remained committed to its shareholder obligation over the years. In FY24, it returned $750 million to investors through dividends and share repurchases. The company’s ability to make dividend payments was supported by its robust free cash flow, which amounted to $952 million, up 12% from last year. It currently offers a quarterly dividend of $0.125 per share and has a dividend yield of 4.51%, as of September 22. It is one of the best dividend giants as the company maintains a 40-year streak of consistent dividend growth.
The number of hedge funds tracked by Insider Monkey holding stakes in Amcor plc (NYSE:AMCR) grew to 21 in Q2 2024, from 17 in the previous quarter. These stakes have a total value of over $115 million.
Overall AMCR ranks 5th on our list of dividend giants with lowest short interest in 2024. While we acknowledge the potential AMCR as an investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns and doing so within a shorter timeframe. If you are looking for an AI stock that is more promising than AMCR but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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Disclosure: None. This article is originally published at Insider Monkey.
