A whopping number of 13F filings filed with U.S. Securities and Exchange Commission has been processed by Insider Monkey so that individual investors can look at the overall hedge fund sentiment towards the stocks included in their watchlists. These freshly-submitted public filings disclose money managers’ equity positions as of the end of the three-month period that ended March 31st, so let’s proceed with the discussion of the hedge fund sentiment on Reynolds Consumer Products Inc. (NASDAQ:REYN).
Is REYN stock a buy? Reynolds Consumer Products Inc. (NASDAQ:REYN) has experienced an increase in hedge fund interest in recent months. Reynolds Consumer Products Inc. (NASDAQ:REYN) was in 19 hedge funds’ portfolios at the end of the first quarter of 2021. The all time high for this statistic was previously 18. This means the bullish number of hedge fund positions in this stock currently sits at its all time high. Our calculations also showed that REYN 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.
Cliff Asness of AQR Capital Management
At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, Chuck Schumer recently stated that marijuana legalization will be a Senate priority. So, we are checking out this under the radar stock that will benefit from this. We go through lists like the 10 best battery 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 go over the fresh hedge fund action encompassing Reynolds Consumer Products Inc. (NASDAQ:REYN).
Do Hedge Funds Think REYN Is A Good Stock To Buy Now?
At first quarter’s end, a total of 19 of the hedge funds tracked by Insider Monkey were long this stock, a change of 6% from the previous quarter. Below, you can check out the change in hedge fund sentiment towards REYN over the last 23 quarters. With hedge funds’ positions undergoing their usual ebb and flow, there exists a few notable hedge fund managers who were adding to their stakes substantially (or already accumulated large positions).
When looking at the institutional investors followed by Insider Monkey, John Smith Clark’s Southpoint Capital Advisors has the number one position in Reynolds Consumer Products Inc. (NASDAQ:REYN), worth close to $48.6 million, accounting for 0.8% of its total 13F portfolio. Coming in second is Royce & Associates, led by Chuck Royce, holding a $18.4 million position; the fund has 0.1% of its 13F portfolio invested in the stock. Remaining peers that hold long positions include Noam Gottesman’s GLG Partners, Benjamin A. Smith’s Laurion Capital Management and Ken Griffin’s Citadel Investment Group. In terms of the portfolio weights assigned to each position Factorial Partners allocated the biggest weight to Reynolds Consumer Products Inc. (NASDAQ:REYN), around 0.81% of its 13F portfolio. Southpoint Capital Advisors is also relatively very bullish on the stock, earmarking 0.81 percent of its 13F equity portfolio to REYN.
As industrywide interest jumped, key money managers have been driving this bullishness. AQR Capital Management, managed by Cliff Asness, assembled the biggest position in Reynolds Consumer Products Inc. (NASDAQ:REYN). AQR Capital Management had $3 million invested in the company at the end of the quarter. Donald Sussman’s Paloma Partners also made a $0.3 million investment in the stock during the quarter. The only other fund with a new position in the stock is Minhua Zhang’s Weld Capital Management.
Let’s check out hedge fund activity in other stocks similar to Reynolds Consumer Products Inc. (NASDAQ:REYN). These stocks are Silicon Laboratories (NASDAQ:SLAB), First American Financial Corp (NYSE:FAF), CACI International Inc (NYSE:CACI), BOK Financial Corporation (NASDAQ:BOKF), Ovintiv Inc. (NYSE:OVV), Coherent, Inc. (NASDAQ:COHR), and Stericycle Inc (NASDAQ:SRCL). This group of stocks’ market valuations match REYN’s market valuation.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| SLAB | 18 | 142253 | 0 |
| FAF | 32 | 964771 | -7 |
| CACI | 21 | 632278 | -7 |
| BOKF | 17 | 454944 | -9 |
| OVV | 30 | 533700 | 4 |
| COHR | 41 | 1454406 | 19 |
| SRCL | 24 | 648956 | -1 |
| Average | 26.1 | 690187 | -0.1 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 26.1 hedge funds with bullish positions and the average amount invested in these stocks was $690 million. That figure was $153 million in REYN’s case. Coherent, Inc. (NASDAQ:COHR) is the most popular stock in this table. On the other hand BOK Financial Corporation (NASDAQ:BOKF) is the least popular one with only 17 bullish hedge fund positions. Reynolds Consumer Products Inc. (NASDAQ:REYN) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for REYN is 40.2. 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 negative signal and 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 23.8% in 2021 through July 16th and surpassed the market again by 7.7 percentage points. Unfortunately REYN wasn’t nearly as popular as these 5 stocks (hedge fund sentiment was quite bearish); REYN investors were disappointed as the stock returned -0.6% since the end of March (through 7/16) 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 most of these stocks already outperformed the market in 2021.
Follow Reynolds Consumer Products Inc. (NASDAQ:REYN)
Follow Reynolds Consumer Products Inc. (NASDAQ:REYN)
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Disclosure: None. This article was originally published at Insider Monkey.
