As we already know from media reports and hedge fund investor letters, hedge funds delivered their best returns in a decade. Most investors who decided to stick with hedge funds after a rough 2018 recouped their losses by the end of the second quarter. We get to see hedge funds’ thoughts towards the market and individual stocks by aggregating their quarterly portfolio movements and reading their investor letters. In this article, we will particularly take a look at what hedge funds think about Graphic Packaging Holding Company (NYSE:GPK).
Graphic Packaging Holding Company (NYSE:GPK) was in 30 hedge funds’ portfolios at the end of June. GPK shareholders have witnessed an increase in support from the world’s most elite money managers of late. There were 24 hedge funds in our database with GPK holdings at the end of the previous quarter. Our calculations also showed that GPK isn’t among the 30 most popular stocks among hedge funds (view the video below).
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’ large-cap stock picks indeed failed to beat the market between 1999 and 2016. However, we were able to identify in advance a select group of hedge fund holdings that outperformed the market by 40 percentage points since May 2014 through May 30, 2019 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that’ll significantly underperform the market. We have been tracking and sharing the list of these stocks since February 2017 and they lost 25.7% through September 30, 2019. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
Unlike former hedge manager, Dr. Steve Sjuggerud, 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. Let’s check out the recent hedge fund action surrounding Graphic Packaging Holding Company (NYSE:GPK).
How are hedge funds trading Graphic Packaging Holding Company (NYSE:GPK)?
At the end of the second quarter, a total of 30 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 25% from one quarter earlier. Below, you can check out the change in hedge fund sentiment towards GPK over the last 16 quarters. With hedge funds’ capital changing hands, there exists an “upper tier” of notable hedge fund managers who were boosting their holdings considerably (or already accumulated large positions).
The largest stake in Graphic Packaging Holding Company (NYSE:GPK) was held by Citadel Investment Group, which reported holding $161.6 million worth of stock at the end of March. It was followed by Eminence Capital with a $119 million position. Other investors bullish on the company included Millennium Management, Maverick Capital, and D E Shaw.
Now, key hedge funds have jumped into Graphic Packaging Holding Company (NYSE:GPK) headfirst. Renaissance Technologies, initiated the biggest position in Graphic Packaging Holding Company (NYSE:GPK). Renaissance Technologies had $11.6 million invested in the company at the end of the quarter. Matthew Hulsizer’s PEAK6 Capital Management also made a $3.4 million investment in the stock during the quarter. The following funds were also among the new GPK investors: Joseph Mathias’s Concourse Capital Management, Dmitry Balyasny’s Balyasny Asset Management, and John Overdeck and David Siegel’s Two Sigma Advisors.
Let’s also examine hedge fund activity in other stocks – not necessarily in the same industry as Graphic Packaging Holding Company (NYSE:GPK) but similarly valued. We will take a look at Ryman Hospitality Properties, Inc. (NYSE:RHP), Healthcare Realty Trust Inc (NYSE:HR), Trex Company, Inc. (NYSE:TREX), and Floor & Decor Holdings, Inc. (NYSE:FND). This group of stocks’ market values resemble GPK’s market value.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| RHP | 21 | 407514 | 3 |
| HR | 9 | 47376 | -5 |
| TREX | 19 | 185384 | -1 |
| FND | 21 | 381803 | -10 |
| Average | 17.5 | 255519 | -3.25 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 17.5 hedge funds with bullish positions and the average amount invested in these stocks was $256 million. That figure was $534 million in GPK’s case. Ryman Hospitality Properties, Inc. (NYSE:RHP) is the most popular stock in this table. On the other hand Healthcare Realty Trust Inc (NYSE:HR) is the least popular one with only 9 bullish hedge fund positions. Compared to these stocks Graphic Packaging Holding Company (NYSE:GPK) is more popular among hedge funds. 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 GPK as the stock returned 6.1% during Q3 and outperformed the market by an even larger margin. Hedge funds were clearly right about piling into this stock relative to other stocks with similar market capitalizations.
Disclosure: None. This article was originally published at Insider Monkey.
