Last year we predicted the arrival of the first US recession since 2009 and we told in advance that the market will decline by at least 20% in (Recession is Imminent: We Need A Travel Ban NOW). In these volatile markets we scrutinize hedge fund filings to get a reading on which direction each stock might be going. In this article, we will take a closer look at hedge fund sentiment towards Ball Corporation (NYSE:BLL).
Is Ball Corporation (NYSE:BLL) ready to rally soon? Investors who are in the know were in a bullish mood. The number of long hedge fund positions moved up by 6 recently. Ball Corporation (NYSE:BLL) was in 44 hedge funds’ portfolios at the end of June. The all time high for this statistic is 44. This means the bullish number of hedge fund positions in this stock currently sits at its all time high. Our calculations also showed that BLL isn’t among the 30 most popular stocks among hedge funds (click for Q2 rankings). There were 38 hedge funds in our database with BLL holdings at the end of March.
Hedge funds’ reputation as shrewd investors has been tarnished in the last decade as their hedged returns couldn’t keep up with the unhedged returns of the market indices. Our research has shown that hedge funds’ small-cap stock picks managed to beat the market by double digits annually between 1999 and 2016, but the margin of outperformance has been declining in recent years. Nevertheless, we were still able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by 79 percentage points since March 2017 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that underperformed the market by 10 percentage points annually between 2006 and 2017. Interestingly the margin of underperformance of these stocks has been increasing in recent years. Investors who are long the market and short these stocks would have returned more than 27% annually between 2015 and 2017. We have been tracking and sharing the list of these stocks since February 2017 in our quarterly newsletter.
Richard Chilton of Chilton Investment Company
At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, lithium mining is one of the fastest growing industries right now, so we are checking out stock pitches like this emerging lithium stock. 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. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. You can subscribe to our free daily newsletter on our homepage. Now let’s go over the latest hedge fund action encompassing Ball Corporation (NYSE:BLL).
Do Hedge Funds Think BLL Is A Good Stock To Buy Now?
At Q2’s end, a total of 44 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 16% from the previous quarter. By comparison, 38 hedge funds held shares or bullish call options in BLL 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.
Of the funds tracked by Insider Monkey, Daniel Sundheim’s D1 Capital Partners has the most valuable position in Ball Corporation (NYSE:BLL), worth close to $525.7 million, amounting to 3.4% of its total 13F portfolio. Sitting at the No. 2 spot is Richard Chilton of Chilton Investment Company, with a $283.6 million position; the fund has 7.1% of its 13F portfolio invested in the stock. Other members of the smart money with similar optimism comprise Greg Poole’s Echo Street Capital Management, Phill Gross and Robert Atchinson’s Adage Capital Management and David Cohen and Harold Levy’s Iridian Asset Management. In terms of the portfolio weights assigned to each position Chilton Investment Company allocated the biggest weight to Ball Corporation (NYSE:BLL), around 7.13% of its 13F portfolio. Bluegrass Capital Partners is also relatively very bullish on the stock, designating 6.68 percent of its 13F equity portfolio to BLL.
As industrywide interest jumped, key hedge funds were breaking ground themselves. Thames Capital Management, managed by Jay Genzer, established the biggest position in Ball Corporation (NYSE:BLL). Thames Capital Management had $11.1 million invested in the company at the end of the quarter. Ray Dalio’s Bridgewater Associates also made a $11.1 million investment in the stock during the quarter. The following funds were also among the new BLL investors: Paul Tudor Jones’s Tudor Investment Corp, Donald Sussman’s Paloma Partners, and Roger Keith Long’s Otter Creek Management.
Let’s now take a look at hedge fund activity in other stocks – not necessarily in the same industry as Ball Corporation (NYSE:BLL) but similarly valued. We will take a look at West Pharmaceutical Services Inc. (NYSE:WST), RingCentral Inc (NYSE:RNG), Carnival Corporation & plc (NYSE:CUK), Futu Holdings Limited (NASDAQ:FUTU), Tencent Music Entertainment Group (NYSE:TME), Etsy Inc (NASDAQ:ETSY), and Generac Holdings Inc. (NYSE:GNRC). This group of stocks’ market valuations resemble BLL’s market valuation.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| WST | 31 | 562904 | 5 |
| RNG | 47 | 3285023 | -4 |
| CUK | 10 | 236979 | 6 |
| FUTU | 31 | 1190137 | 5 |
| TME | 35 | 570093 | -28 |
| ETSY | 47 | 1731703 | -6 |
| GNRC | 38 | 594282 | 2 |
| Average | 34.1 | 1167303 | -2.9 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 34.1 hedge funds with bullish positions and the average amount invested in these stocks was $1167 million. That figure was $1571 million in BLL’s case. RingCentral Inc (NYSE:RNG) is the most popular stock in this table. On the other hand Carnival Corporation & plc (NYSE:CUK) is the least popular one with only 10 bullish hedge fund positions. Ball Corporation (NYSE:BLL) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for BLL is 85.9. 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 22.9% in 2021 through October 1st and still beat the market by 5.6 percentage points. Hedge funds were also right about betting on BLL as the stock returned 11.1% since the end of Q2 (through 10/1) 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.
