Is Sealed Air Corporation (NYSE:SEE) a good stock to buy right now? We at Insider Monkey like to examine what billionaires and hedge funds think of a company before spending days of research on it. Given their 2 and 20 payment structure, hedge funds have more incentives and resources than the average investor. The funds have access to expert networks and get tips from industry insiders. They also employ numerous Ivy League graduates and MBAs. Like everyone else, hedge funds perform miserably at times, but their consensus picks have historically outperformed the market after risk adjustments.
Is Sealed Air Corporation (NYSE:SEE) a bargain? The smart money is turning bullish. The number of bullish hedge fund bets moved up by 5 lately. Our calculations also showed that SEE isn’t among the 30 most popular stocks among hedge funds (click for Q3 rankings and see the video below for Q2 rankings). SEE was in 32 hedge funds’ portfolios at the end of September. There were 27 hedge funds in our database with SEE holdings at the end of the previous quarter.
Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.
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 91% since May 2014 and outperformed the Russell 2000 ETFs by nearly 40 percentage points. Our short strategy outperformed the S&P 500 short ETFs by 20 percentage points annually (see the details here). That’s why we believe hedge fund sentiment is a useful indicator that investors should pay attention to.
Michael Lowenstein of Kensico Capital
Unlike the largest US hedge funds that are convinced Dow will soar past 40,000 or the world’s most bearish hedge fund that’s more convinced than ever that a crash is coming, our long-short investment strategy doesn’t rely on bull or bear markets to deliver double digit returns. We only rely on the best performing hedge funds‘ buy/sell signals. Let’s take a look at the new hedge fund action regarding Sealed Air Corporation (NYSE:SEE).
What does smart money think about Sealed Air Corporation (NYSE:SEE)?
Heading into the fourth quarter of 2019, a total of 32 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 19% from the second quarter of 2019. On the other hand, there were a total of 30 hedge funds with a bullish position in SEE a year ago. With hedgies’ sentiment swirling, there exists a select group of notable hedge fund managers who were boosting their stakes meaningfully (or already accumulated large positions).
More specifically, Kensico Capital was the largest shareholder of Sealed Air Corporation (NYSE:SEE), with a stake worth $255.5 million reported as of the end of September. Trailing Kensico Capital was Rivulet Capital, which amassed a stake valued at $178 million. Nitorum Capital, Impax Asset Management, and Renaissance Technologies were also very fond of the stock, becoming one of the largest hedge fund holders of the company. In terms of the portfolio weights assigned to each position Rivulet Capital allocated the biggest weight to Sealed Air Corporation (NYSE:SEE), around 20.19% of its portfolio. Nitorum Capital is also relatively very bullish on the stock, designating 6.72 percent of its 13F equity portfolio to SEE.
With a general bullishness amongst the heavyweights, some big names have been driving this bullishness. Citadel Investment Group, managed by Ken Griffin, created the most outsized position in Sealed Air Corporation (NYSE:SEE). Citadel Investment Group had $26.1 million invested in the company at the end of the quarter. Phill Gross and Robert Atchinson’s Adage Capital Management also initiated a $7.8 million position during the quarter. The following funds were also among the new SEE investors: Paul Tudor Jones’s Tudor Investment Corp, Jeffrey Talpins’s Element Capital Management, and Matthew Tewksbury’s Stevens Capital Management.
Let’s now take a look at hedge fund activity in other stocks similar to Sealed Air Corporation (NYSE:SEE). These stocks are Haemonetics Corporation (NYSE:HAE), Entegris Inc (NASDAQ:ENTG), Pentair plc (NYSE:PNR), and Buckeye Partners, L.P. (NYSE:BPL). This group of stocks’ market valuations are similar to SEE’s market valuation.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| HAE | 21 | 601291 | -2 |
| ENTG | 26 | 807428 | 2 |
| PNR | 22 | 415842 | 1 |
| BPL | 18 | 536490 | 5 |
| Average | 21.75 | 590263 | 1.5 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 21.75 hedge funds with bullish positions and the average amount invested in these stocks was $590 million. That figure was $951 million in SEE’s case. Entegris Inc (NASDAQ:ENTG) is the most popular stock in this table. On the other hand Buckeye Partners, L.P. (NYSE:BPL) is the least popular one with only 18 bullish hedge fund positions. Compared to these stocks Sealed Air Corporation (NYSE:SEE) is more popular among hedge funds. Our calculations showed that top 20 most popular stocks among hedge funds returned 37.4% in 2019 through the end of November and outperformed the S&P 500 ETF (SPY) by 9.9 percentage points. Unfortunately SEE wasn’t nearly as popular as these 20 stocks and hedge funds that were betting on SEE were disappointed as the stock returned -9.1% during the first two months of the fourth 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 70 percent of these stocks already outperformed the market in Q4.
Disclosure: None. This article was originally published at Insider Monkey.
