Is Graphic Packaging Holding Company (NYSE:GPK) a good equity to bet on right now? We like to check what the smart money thinks first before doing extensive research. Although there have been several high profile failed hedge fund picks, the consensus picks among hedge fund investors have historically outperformed the market after adjusting for known risk attributes. It’s not surprising given that hedge funds have access to better information and more resources to predict the winners in the stock market.
Graphic Packaging Holding Company (NYSE:GPK) was in 24 hedge funds’ portfolios at the end of March. GPK investors should be aware of an increase in support from the world’s most elite money managers recently. There were 20 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.
Why do we pay any attention at all to hedge fund sentiment? 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 30.9% through May 30, 2019. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
Let’s take a glance at the new hedge fund action encompassing Graphic Packaging Holding Company (NYSE:GPK).
What does the smart money think about Graphic Packaging Holding Company (NYSE:GPK)?
At the end of the first quarter, a total of 24 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 20% from the fourth quarter of 2018. Below, you can check out the change in hedge fund sentiment towards GPK over the last 15 quarters. With the smart money’s sentiment swirling, there exists a few key hedge fund managers who were upping their stakes substantially (or already accumulated large positions).
The largest stake in Graphic Packaging Holding Company (NYSE:GPK) was held by Eminence Capital, which reported holding $202.3 million worth of stock at the end of March. It was followed by Maverick Capital with a $102.9 million position. Other investors bullish on the company included Millennium Management, Citadel Investment Group, and Canyon Capital Advisors.
Now, key money managers were leading the bulls’ herd. Point72 Asset Management, managed by Steve Cohen, initiated the largest position in Graphic Packaging Holding Company (NYSE:GPK). Point72 Asset Management had $21.6 million invested in the company at the end of the quarter. Joel Greenblatt’s Gotham Asset Management also initiated a $6 million position during the quarter. The following funds were also among the new GPK investors: Jonathan Barrett and Paul Segal’s Luminus Management, David Brown’s Hawk Ridge Management, and Noam Gottesman’s GLG Partners.
Let’s go over 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 The Brink’s Company (NYSE:BCO), Selective Insurance Group, Inc. (NASDAQ:SIGI), LiveRamp Holdings, Inc. (NYSE:RAMP), and Bank OZK (NASDAQ:OZK). All of these stocks’ market caps are closest to GPK’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| BCO | 25 | 490686 | 3 |
| SIGI | 12 | 28810 | -2 |
| RAMP | 23 | 323059 | 5 |
| OZK | 20 | 256803 | 2 |
| Average | 20 | 274840 | 2 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 20 hedge funds with bullish positions and the average amount invested in these stocks was $275 million. That figure was $640 million in GPK’s case. The Brink’s Company (NYSE:BCO) is the most popular stock in this table. On the other hand Selective Insurance Group, Inc. (NASDAQ:SIGI) is the least popular one with only 12 bullish hedge fund positions. Graphic Packaging Holding Company (NYSE:GPK) 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 1.9% in Q2 through May 30th and outperformed the S&P 500 ETF (SPY) by more than 3 percentage points. Hedge funds were also right about betting on GPK as the stock returned 2.2% during the same period and outperformed the market by an even larger margin. Hedge funds were rewarded for their relative bullishness.
Disclosure: None. This article was originally published at Insider Monkey.
