We hate to say this but, we told you so. On February 27th we published an article with the title Recession is Imminent: We Need A Travel Ban NOW and predicted a US recession when the S&P 500 Index was trading at the 3150 level. We also told you to short the market and buy long-term Treasury bonds. Our article also called for a total international travel ban. While we were warning you, President Trump minimized the threat and failed to act promptly. As a result of his inaction, we will now experience a deeper recession. In these volatile markets we scrutinize hedge fund filings to get a reading on which direction each stock might be going. The latest 13F reporting period has come and gone, and Insider Monkey is again at the forefront when it comes to making use of this gold mine of data. Insider Monkey finished processing 835 13F filings submitted by hedge funds and prominent investors. These filings show these funds’ portfolio positions as of December 31st, 2019. 0
Is Ball Corporation (NYSE:BLL) a buy, sell, or hold? The smart money is getting more optimistic. The number of long hedge fund positions improved by 10 in recent months. Our calculations also showed that BLL isn’t among the 30 most popular stocks among hedge funds (click for Q4 rankings and see the video below for Q3 rankings). BLL was in 44 hedge funds’ portfolios at the end of the fourth quarter of 2019. There were 34 hedge funds in our database with BLL positions at the end of the previous quarter.
Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.
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 41 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
We leave no stone unturned when looking for the next great investment idea. For example we recently identified a stock that trades 25% below the net cash on its balance sheet. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences, and go through short-term trade recommendations like this one. We even check out the recommendations of services with hard to believe track records. Our best call in 2020 was shorting the market when S&P 500 was trading at 3150 after realizing the coronavirus pandemic’s significance before most investors. Keeping this in mind we’re going to go over the latest hedge fund action surrounding Ball Corporation (NYSE:BLL).
Hedge fund activity in Ball Corporation (NYSE:BLL)
At the end of the fourth quarter, a total of 44 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 29% from the previous quarter. By comparison, 33 hedge funds held shares or bullish call options in BLL a year ago. With the smart money’s sentiment swirling, there exists a select group of noteworthy hedge fund managers who were adding to their holdings substantially (or already accumulated large positions).
Among these funds, Chilton Investment Company held the most valuable stake in Ball Corporation (NYSE:BLL), which was worth $201.7 million at the end of the third quarter. On the second spot was Iridian Asset Management which amassed $125.2 million worth of shares. Two Sigma Advisors, MIG Capital, and Point72 Asset Management 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 Chilton Investment Company allocated the biggest weight to Ball Corporation (NYSE:BLL), around 6.45% of its 13F portfolio. MIG Capital is also relatively very bullish on the stock, setting aside 5.18 percent of its 13F equity portfolio to BLL.
As one would reasonably expect, some big names were leading the bulls’ herd. Point72 Asset Management, managed by Steve Cohen, assembled the most valuable position in Ball Corporation (NYSE:BLL). Point72 Asset Management had $38.3 million invested in the company at the end of the quarter. Clint Carlson’s Carlson Capital also made a $32.3 million investment in the stock during the quarter. The other funds with brand new BLL positions are Dmitry Balyasny’s Balyasny Asset Management, Greg Poole’s Echo Street Capital Management, and Clint Murray’s Lodge Hill Capital.
Let’s check out hedge fund activity in other stocks similar to Ball Corporation (NYSE:BLL). We will take a look at Copart, Inc. (NASDAQ:CPRT), Ameriprise Financial, Inc. (NYSE:AMP), IAC/InterActiveCorp (NASDAQ:IAC), and Smith & Nephew plc (NYSE:SNN). 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 |
|---|---|---|---|
| CPRT | 46 | 984642 | 3 |
| AMP | 37 | 1122580 | 8 |
| IAC | 71 | 3319257 | 16 |
| SNN | 3 | 131490 | -3 |
| Average | 39.25 | 1389492 | 6 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 39.25 hedge funds with bullish positions and the average amount invested in these stocks was $1389 million. That figure was $680 million in BLL’s case. IAC/InterActiveCorp (NASDAQ:IAC) is the most popular stock in this table. On the other hand Smith & Nephew plc (NYSE:SNN) is the least popular one with only 3 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 calculations showed that top 20 most popular stocks among hedge funds returned 41.3% in 2019 and outperformed the S&P 500 ETF (SPY) by 10.1 percentage points. These stocks lost 22.3% in 2020 through March 16th but still beat the market by 3.2 percentage points. Hedge funds were also right about betting on BLL as the stock returned -9.5% during the first quarter (through March 16th) and outperformed the market. Hedge funds were rewarded for their relative bullishness.
Disclosure: None. This article was originally published at Insider Monkey.
