Looking for high-potential stocks? Just follow the big players within the hedge fund industry. Why should you do so? Let’s take a brief look at what statistics have to say about hedge funds’ stock picking abilities to illustrate. The Standard and Poor’s 500 Index returned approximately 7.6% in the 12 months ending November 21, with more than 51% of the stocks in the index failing to beat the benchmark. Therefore, the odds that one will pin down a winner by randomly picking a stock are less than the odds in a fair coin-tossing game. Conversely, best performing hedge funds’ 30 preferred mid-cap stocks generated a return of 18% during the same 12-month period. Coincidence? It might happen to be so, but it is unlikely. Our research covering a 17-year period indicates that hedge funds’ stock picks generate superior risk-adjusted returns. That’s why we believe it is wise to check hedge fund activity before you invest your time or your savings on a stock like Graphic Packaging Holding Company (NYSE:GPK).
Graphic Packaging Holding Company (NYSE:GPK) investors should pay attention to a decrease in hedge fund interest lately. At the end of September, there were 32 funds from our database holding shares, down from 36 funds a quarter earlier. However, the level and the change in hedge fund popularity aren’t the only variables you need to analyze to decipher hedge funds’ perspectives. A stock may witness a boost in popularity but it may still be less popular than similarly priced stocks. That’s why at the end of this article we will examine companies such as Eaton Vance Corp (NYSE:EV), Retail Properties of America Inc (NYSE:RPAI), and Columbia Sportswear Company (NASDAQ:COLM) to gather more data points.
Follow Graphic Packaging Holding Co (NYSE:GPK)
Follow Graphic Packaging Holding Co (NYSE:GPK)
At Insider Monkey, we’ve developed an investment strategy that has delivered market-beating returns over the past 12 months. Our strategy identifies the 100 best-performing funds of the previous quarter from among the collection of 700+ successful funds that we track in our database, which we accomplish using our returns methodology. We then study the portfolios of those 100 funds using the latest 13F data to uncover the 30 most popular mid-cap stocks (market caps of between $1 billion and $10 billion) among them to hold until the next filing period. This strategy delivered 18% gains over the past 12 months, more than doubling the 8% returns enjoyed by the S&P 500 ETFs.
Copyright: bialasiewicz / 123RF Stock Photo
With all of this in mind, we’re going to take a look at the fresh action regarding Graphic Packaging Holding Company (NYSE:GPK).
How have hedgies been trading Graphic Packaging Holding Company (NYSE:GPK)?
Heading into the fourth quarter of 2016, 32 hedge funds tracked by Insider Monkey were bullish on this stock, a decline of 11% from the previous quarter. With hedgies’ positions undergoing their usual ebb and flow, there exists a few notable hedge fund managers who were boosting their stakes significantly (or already accumulated large positions).
According to publicly available hedge fund and institutional investor holdings data compiled by Insider Monkey, David Cohen and Harold Levy’s Iridian Asset Management has the number one position in Graphic Packaging Holding Company (NYSE:GPK), worth close to $362.2 million, accounting for 3.2% of its total 13F portfolio. Coming in second is Hoplite Capital Management, managed by John Lykouretzos, which holds a $145.7 million position; the fund has 6.7% of its 13F portfolio invested in the stock. Some other hedge funds and institutional investors that are bullish encompass Barry Rosenstein’s JANA Partners, D. E. Shaw’s D E Shaw and Cliff Asness’ AQR Capital Management.
Judging by the fact that Graphic Packaging Holding Company (NYSE:GPK) has faced a decline in interest from the aggregate hedge fund industry, it’s safe to say that there were a few funds that slashed their entire stakes in the third quarter. Interestingly, First Eagle Investment Management sold off the largest stake of the 700 funds tracked by Insider Monkey, valued at close to $120.6 million in stock, and Joshua Kaufman and Craig Nerenberg’s Brenner West Capital Partners was right behind this move, as the fund dumped about $42.9 million worth of shares.
Let’s check out hedge fund activity in other stocks similar to Graphic Packaging Holding Company (NYSE:GPK). We will take a look at Eaton Vance Corp (NYSE:EV), Retail Properties of America Inc (NYSE:RPAI), Columbia Sportswear Company (NASDAQ:COLM), and Embraer SA (ADR) (NYSE:ERJ). All of these stocks’ market caps resemble GPK’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| EV | 9 | 15421 | -1 |
| RPAI | 14 | 234056 | -5 |
| COLM | 17 | 107668 | -3 |
| ERJ | 11 | 47041 | 1 |
As you can see these stocks had an average of 13 funds holding shares at the end of September and the average amount invested in these stocks was $101 million. That figure was $936 million in GPK’s case. Columbia Sportswear Company (NASDAQ:COLM) is the most popular stock in this table. On the other hand Eaton Vance Corp (NYSE:EV) is the least popular one with only nine investors reporting long positions. Compared to these stocks Graphic Packaging Holding Company (NYSE:GPK) 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.
