Insider Monkey has processed numerous 13F filings of hedge funds and successful value investors to create an extensive database of hedge fund holdings. The 13F filings show the hedge funds’ and successful investors’ positions as of the end of the fourth quarter. You can find articles about an individual hedge fund’s trades on numerous financial news websites. However, in this article we will take a look at their collective moves over the last 6 years and analyze what the smart money thinks of Packaging Corporation Of America (NYSE:PKG) based on that data.
Is Packaging Corporation Of America (NYSE:PKG) going to take off soon? Money managers were getting more optimistic. The number of bullish hedge fund positions improved by 13 recently. Packaging Corporation Of America (NYSE:PKG) was in 29 hedge funds’ portfolios at the end of the first quarter of 2021. The all time high for this statistic is 33. Our calculations also showed that PKG isn’t among the 30 most popular stocks among hedge funds (click for Q1 rankings).
Why do we pay any attention at all to hedge fund sentiment? Our research has shown that a select group of hedge fund holdings outperformed the S&P 500 ETFs by 115 percentage points since March 2017 (see the details here). That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
Dmitry Balyasny of Balyasny Asset Management
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. Keeping this in mind we’re going to analyze the new hedge fund action encompassing Packaging Corporation Of America (NYSE:PKG).
Do Hedge Funds Think PKG Is A Good Stock To Buy Now?
Heading into the second quarter of 2021, a total of 29 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 81% from the previous quarter. On the other hand, there were a total of 23 hedge funds with a bullish position in PKG a year ago. With hedgies’ capital changing hands, there exists a select group of noteworthy hedge fund managers who were boosting their holdings significantly (or already accumulated large positions).
Among these funds, AQR Capital Management held the most valuable stake in Packaging Corporation Of America (NYSE:PKG), which was worth $100 million at the end of the fourth quarter. On the second spot was Millennium Management which amassed $46.1 million worth of shares. Balyasny Asset Management, D E Shaw, 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 TwinBeech Capital allocated the biggest weight to Packaging Corporation Of America (NYSE:PKG), around 0.32% of its 13F portfolio. Quantinno Capital is also relatively very bullish on the stock, earmarking 0.32 percent of its 13F equity portfolio to PKG.
As aggregate interest increased, some big names have been driving this bullishness. Balyasny Asset Management, managed by Dmitry Balyasny, assembled the most outsized position in Packaging Corporation Of America (NYSE:PKG). Balyasny Asset Management had $26.9 million invested in the company at the end of the quarter. D. E. Shaw’s D E Shaw also made a $20.6 million investment in the stock during the quarter. The following funds were also among the new PKG investors: Renaissance Technologies, Ken Griffin’s Citadel Investment Group, and Michael Gelband’s ExodusPoint Capital.
Let’s now take a look at hedge fund activity in other stocks – not necessarily in the same industry as Packaging Corporation Of America (NYSE:PKG) but similarly valued. These stocks are UWM Holdings Corporation Class (NYSE:UWMC), Textron Inc. (NYSE:TXT), Masimo Corporation (NASDAQ:MASI), Teva Pharmaceutical Industries Limited (NYSE:TEVA), InterContinental Hotels Group PLC (NYSE:IHG), XPO Logistics Inc (NYSE:XPO), and Snap-on Incorporated (NYSE:SNA). All of these stocks’ market caps match PKG’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| UWMC | 19 | 76660 | 19 |
| TXT | 21 | 702168 | -2 |
| MASI | 35 | 308604 | 6 |
| TEVA | 24 | 1119017 | -2 |
| IHG | 8 | 19947 | 1 |
| XPO | 40 | 2685320 | 0 |
| SNA | 18 | 431948 | -8 |
| Average | 23.6 | 763381 | 2 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 23.6 hedge funds with bullish positions and the average amount invested in these stocks was $763 million. That figure was $245 million in PKG’s case. XPO Logistics Inc (NYSE:XPO) is the most popular stock in this table. On the other hand InterContinental Hotels Group PLC (NYSE:IHG) is the least popular one with only 8 bullish hedge fund positions. Packaging Corporation Of America (NYSE:PKG) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for PKG is 69.2. 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. This is a slightly positive signal but we’d rather spend our time researching stocks that hedge funds are piling on. 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 22.8% in 2021 through July 2nd and beat the market again by 6 percentage points. Unfortunately PKG wasn’t nearly as popular as these 5 stocks and hedge funds that were betting on PKG were disappointed as the stock returned 2.3% since the end of March (through 7/2) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 5 most popular stocks among hedge funds as many of these stocks already outperformed the market since 2019.
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Disclosure: None. This article was originally published at Insider Monkey.
