Is Sonoco Products Company (NYSE:SON) a good bet right now? We like to analyze hedge fund sentiment before doing days of in-depth research. We do so because hedge funds and other elite investors have numerous Ivy league graduates, expert network advisers, and supply chain tipsters working or consulting for them. There is not a shortage of news stories covering failed hedge fund investments and it is a fact that hedge funds’ picks don’t beat the market 100% of the time, but their consensus picks have historically done very well and have outperformed the market after adjusting for risk.
Is Sonoco Products Company (NYSE:SON) going to take off soon? The smart money is buying. The number of bullish hedge fund bets advanced by 3 lately. Our calculations also showed that SON isn’t among the 30 most popular stocks among hedge funds.
In the financial world there are a large number of tools investors have at their disposal to grade stocks. A pair of the most under-the-radar tools are hedge fund and insider trading indicators. We have shown that, historically, those who follow the top picks of the best fund managers can outperform the broader indices by a solid amount. Insider Monkey’s flagship best performing hedge funds strategy returned 6.3% year to date (through December 3rd) and outperformed the market even though it draws its stock picks among small-cap stocks. This strategy also outperformed the market by 18 percentage points since its inception (see the details here). That’s why we believe hedge fund sentiment is a useful indicator that investors should pay attention to.
Let’s go over the fresh hedge fund action encompassing Sonoco Products Company (NYSE:SON).
How are hedge funds trading Sonoco Products Company (NYSE:SON)?
Heading into the fourth quarter of 2018, a total of 23 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 15% from the previous quarter. By comparison, 18 hedge funds held shares or bullish call options in SON heading into this year. So, let’s check out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
The largest stake in Sonoco Products Company (NYSE:SON) was held by Impax Asset Management, which reported holding $27.2 million worth of stock at the end of September. It was followed by Royce & Associates with a $16.7 million position. Other investors bullish on the company included AQR Capital Management, GAMCO Investors, and Citadel Investment Group.
With a general bullishness amongst the heavyweights, key money managers have been driving this bullishness. Blue Mountain Capital, managed by Andrew Feldstein and Stephen Siderow, assembled the most valuable position in Sonoco Products Company (NYSE:SON). Blue Mountain Capital had $0.6 million invested in the company at the end of the quarter. George Hall’s Clinton Group also initiated a $0.4 million position during the quarter. The other funds with brand new SON positions are James Dondero’s Highland Capital Management, Gavin Saitowitz and Cisco J. del Valle’s Springbok Capital, and David Andre and Astro Teller’s Cerebellum Capital.
Let’s also examine hedge fund activity in other stocks – not necessarily in the same industry as Sonoco Products Company (NYSE:SON) but similarly valued. These stocks are Semiconductor Manufacturing International Corporation (NYSE:SMI), Buckeye Partners, L.P. (NYSE:BPL), Genesee & Wyoming Inc (NYSE:GWR), and Brookfield Renewable Partners L.P. (NYSE:BEP). All of these stocks’ market caps resemble SON’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| SMI | 5 | 7782 | 3 |
| BPL | 5 | 10003 | -2 |
| GWR | 11 | 325312 | -4 |
| BEP | 2 | 7451 | 0 |
| Average | 5.75 | 87637 | -0.75 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 5.75 hedge funds with bullish positions and the average amount invested in these stocks was $88 million. That figure was $93 million in SON’s case. Genesee & Wyoming Inc (NYSE:GWR) is the most popular stock in this table. On the other hand Brookfield Renewable Partners L.P. (NYSE:BEP) is the least popular one with only 2 bullish hedge fund positions. Compared to these stocks Sonoco Products Company (NYSE:SON) is more popular among hedge funds. Considering that hedge funds are fond of this stock in relation to its market cap peers, it may be a good idea to analyze it in detail and potentially include it in your portfolio.
Disclosure: None. This article was originally published at Insider Monkey.
