Hedge funds and large money managers usually invest with a focus on the long-term horizon and, therefore, short-lived dips or bumps on the charts, usually don’t make them change their opinion towards a company. This time it may be different. During the fourth quarter of 2018 we observed increased volatility and small-cap stocks underperformed the market. Things completely reversed during the first half of 2019. Hedge fund investor letters indicated that they are cutting their overall exposure, closing out some position and doubling down on others. Let’s take a look at the hedge fund sentiment towards Crown Holdings, Inc. (NYSE:CCK) to find out whether it was one of their high conviction long-term ideas.
Is Crown Holdings, Inc. (NYSE:CCK) ready to rally soon? The best stock pickers are selling. The number of long hedge fund bets decreased by 3 recently. Our calculations also showed that CCK 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.
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 25.8% year to date (through May 30th) and outperformed the market even though it draws its stock picks among small-cap stocks. This strategy also outperformed the market by 40 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.
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. We’re going to review the fresh hedge fund action regarding Crown Holdings, Inc. (NYSE:CCK).
Hedge fund activity in Crown Holdings, Inc. (NYSE:CCK)
At Q2’s end, a total of 35 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -8% from the previous quarter. By comparison, 27 hedge funds held shares or bullish call options in CCK 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.
More specifically, Rivulet Capital was the largest shareholder of Crown Holdings, Inc. (NYSE:CCK), with a stake worth $155 million reported as of the end of March. Trailing Rivulet Capital was Viking Global, which amassed a stake valued at $140.1 million. Adage Capital Management, Firefly Value Partners, and Echo Street Capital Management were also very fond of the stock, giving the stock large weights in their portfolios.
Judging by the fact that Crown Holdings, Inc. (NYSE:CCK) has faced declining sentiment from the aggregate hedge fund industry, it’s safe to say that there exists a select few funds who sold off their entire stakes heading into Q3. Interestingly, Bain Capital’s Brookside Capital dumped the biggest investment of the 750 funds watched by Insider Monkey, totaling close to $68.3 million in stock, and Jerome L. Simon’s Lonestar Capital Management was right behind this move, as the fund cut about $10.9 million worth. These moves are important to note, as total hedge fund interest dropped by 3 funds heading into Q3.
Let’s now take a look at hedge fund activity in other stocks – not necessarily in the same industry as Crown Holdings, Inc. (NYSE:CCK) but similarly valued. These stocks are Lear Corporation (NYSE:LEA), National Oilwell Varco, Inc. (NYSE:NOV), Levi Strauss & Co. (NYSE:LEVI), and Athene Holding Ltd. (NYSE:ATH). This group of stocks’ market values match CCK’s market value.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| LEA | 31 | 843807 | -9 |
| NOV | 22 | 755334 | 4 |
| LEVI | 15 | 74009 | -10 |
| ATH | 39 | 1352955 | 4 |
| Average | 26.75 | 756526 | -2.75 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 26.75 hedge funds with bullish positions and the average amount invested in these stocks was $757 million. That figure was $877 million in CCK’s case. Athene Holding Ltd. (NYSE:ATH) is the most popular stock in this table. On the other hand Levi Strauss & Co. (NYSE:LEVI) is the least popular one with only 15 bullish hedge fund positions. Crown Holdings, Inc. (NYSE:CCK) is not the most popular stock in this group but hedge fund interest is still above average. Our calculations showed that top 20 most popular stocks among hedge funds returned 24.4% in 2019 through September 30th and outperformed the S&P 500 ETF (SPY) by 4 percentage points. Hedge funds were also right about betting on CCK as the stock returned 8.1% during the third quarter and outperformed the market. Hedge funds were rewarded for their relative bullishness.
Disclosure: None. This article was originally published at Insider Monkey.
