Before we spend days researching a stock idea we’d like to take a look at how hedge funds and billionaire investors recently traded that stock. S&P 500 Index ETF (SPY) lost 8.7% through October 26th. Forty percent of the S&P 500 constituents were down more than 10%. The average return of a randomly picked stock in the index is -9.5%. This means you (or a monkey throwing a dart) have less than an even chance of beating the market by randomly picking a stock. On the other hand, the top 25 most popular S&P 500 stocks among hedge funds had an average loss of 8.8%. In this article, we will take a look at what hedge funds think about Crown Holdings, Inc. (NYSE:CCK).
Is Crown Holdings, Inc. (NYSE:CCK) a buy, sell, or hold? Hedge funds are turning bullish. The number of long hedge fund bets increased by 6 lately. Our calculations also showed that CCK isn’t among the 30 most popular stocks among hedge funds.
So, why do we pay attention to hedge fund sentiment before making any investment decisions? 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 market by 18 percentage points since May 2014 through December 3, 2018 (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. Even if you aren’t comfortable with shorting stocks, you should at least avoid initiating long positions in our short portfolio.
Let’s take a glance at the fresh hedge fund action encompassing Crown Holdings, Inc. (NYSE:CCK).
How are hedge funds trading Crown Holdings, Inc. (NYSE:CCK)?
At the end of the third quarter, a total of 33 of the hedge funds tracked by Insider Monkey were long this stock, a change of 22% from the previous quarter. On the other hand, there were a total of 33 hedge funds with a bullish position in CCK at the beginning of this year. With hedgies’ sentiment swirling, there exists an “upper tier” of notable hedge fund managers who were adding to their stakes meaningfully (or already accumulated large positions).
More specifically, Adage Capital Management was the largest shareholder of Crown Holdings, Inc. (NYSE:CCK), with a stake worth $134.2 million reported as of the end of September. Trailing Adage Capital Management was Citadel Investment Group, which amassed a stake valued at $130 million. Rivulet Capital, Anchor Bolt Capital, and Firefly Value Partners were also very fond of the stock, giving the stock large weights in their portfolios.
As aggregate interest increased, key money managers were leading the bulls’ herd. Rivulet Capital, managed by Barry Lebovits and Joshua Kuntz, established the most outsized position in Crown Holdings, Inc. (NYSE:CCK). Rivulet Capital had $111.7 million invested in the company at the end of the quarter. Peter S. Park’s Park West Asset Management also initiated a $35.8 million position during the quarter. The other funds with brand new CCK positions are Douglas Dossey and Arthur Young’s Tensile Capital, Bain Capital’s Brookside Capital, and Steven Tananbaum’s GoldenTree Asset Management.
Let’s now take a look at hedge fund activity in other stocks similar to Crown Holdings, Inc. (NYSE:CCK). We will take a look at American Homes 4 Rent (NYSE:AMH), Columbia Sportswear Company (NASDAQ:COLM), The Trade Desk, Inc. (NASDAQ:TTD), and Charles River Laboratories International Inc. (NYSE:CRL). This group of stocks’ market caps resemble CCK’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| AMH | 20 | 587084 | -3 |
| COLM | 23 | 180220 | 0 |
| TTD | 14 | 232878 | 1 |
| CRL | 20 | 736924 | 0 |
| Average | 19.25 | 434277 | -0.5 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 19.25 hedge funds with bullish positions and the average amount invested in these stocks was $434 million. That figure was $902 million in CCK’s case. Columbia Sportswear Company (NASDAQ:COLM) is the most popular stock in this table. On the other hand The Trade Desk, Inc. (NASDAQ:TTD) is the least popular one with only 14 bullish hedge fund positions. Compared to these stocks Crown Holdings, Inc. (NYSE:CCK) 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.
Disclosure: None. This article was originally published at Insider Monkey.
