Was The Smart Moner Right About Berry Global Group Inc (BERY)?

We know that hedge funds generate strong, risk-adjusted returns over the long run, therefore imitating the picks that they are collectively bullish on can be a profitable strategy for retail investors. With billions of dollars in assets, smart money investors have to conduct complex analyses, spend many resources and use tools that are not always available for the general crowd. This doesn’t mean that they don’t have occasional colossal losses; they do (like Peltz’s recent General Electric losses). However, it is still a good idea to keep an eye on hedge fund activity. With this in mind, as the current round of 13F filings has just ended, let’s examine the smart money sentiment towards Berry Global Group Inc (NYSE:BERY).

Berry Global Group Inc (NYSE:BERY) has experienced an increase in activity from the world’s largest hedge funds recently. Berry Global Group Inc (NYSE:BERY) was in 40 hedge funds’ portfolios at the end of June. The all time high for this statistics is 53. Our calculations also showed that BERY isn’t among the 30 most popular stocks among hedge funds (click for Q2 rankings and see the video for a quick look at the top 5 stocks).

Video: Watch our video about the top 5 most popular hedge fund stocks.

To the average investor there are numerous gauges shareholders have at their disposal to grade publicly traded companies. A duo of the less utilized gauges are hedge fund and insider trading signals. Our researchers have shown that, historically, those who follow the best picks of the elite fund managers can outclass their index-focused peers by a superb amount (see the details here).

Joshua Friedman of Canyon Capital Advisors

At Insider Monkey we scour multiple sources to uncover the next great investment idea. For example, lithium mining is one of the fastest growing industries right now, so we are checking out stock pitches like this emerging lithium stock. We go through lists like the 10 most profitable companies in the world to pick the best large-cap stocks to buy. 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 website to get excerpts of these letters in your inbox. With all of this in mind we’re going to check out the fresh hedge fund action encompassing Berry Global Group Inc (NYSE:BERY).

How have hedgies been trading Berry Global Group Inc (NYSE:BERY)?

At Q2’s end, a total of 40 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 18% from one quarter earlier. By comparison, 40 hedge funds held shares or bullish call options in BERY a year ago. So, let’s examine which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

Of the funds tracked by Insider Monkey, Canyon Capital Advisors, managed by Joshua Friedman and Mitchell Julis, holds the most valuable position in Berry Global Group Inc (NYSE:BERY). Canyon Capital Advisors has a $442.6 million position in the stock, comprising 14.8% of its 13F portfolio. On Canyon Capital Advisors’s heels is Eminence Capital, managed by Ricky Sandler, which holds a $411.7 million position; 4.1% of its 13F portfolio is allocated to the stock. Other members of the smart money that hold long positions comprise Andrew Wellington and Jeff Keswin’s Lyrical Asset Management, Ken Griffin’s Citadel Investment Group and Ryan Pedlow’s Two Creeks Capital Management. In terms of the portfolio weights assigned to each position SCW Capital Management allocated the biggest weight to Berry Global Group Inc (NYSE:BERY), around 18.76% of its 13F portfolio. Canyon Capital Advisors is also relatively very bullish on the stock, dishing out 14.8 percent of its 13F equity portfolio to BERY.

As industrywide interest jumped, specific money managers have jumped into Berry Global Group Inc (NYSE:BERY) headfirst. 12th Street Asset Management, managed by Michael O’Keefe, initiated the biggest position in Berry Global Group Inc (NYSE:BERY). 12th Street Asset Management had $29.2 million invested in the company at the end of the quarter. Jeffrey Jacobowitz’s Simcoe Capital Management also made a $16.8 million investment in the stock during the quarter. The other funds with new positions in the stock are Alexander Mitchell’s Scopus Asset Management, Steve Cohen’s Point72 Asset Management, and Zach Schreiber’s Point State Capital.

Let’s also examine hedge fund activity in other stocks similar to Berry Global Group Inc (NYSE:BERY). We will take a look at Axon Enterprise, Inc. (NASDAQ:AAXN), Farfetch Limited (NYSE:FTCH), Donaldson Company, Inc. (NYSE:DCI), Sensata Technologies Holding plc (NYSE:ST), Santander Consumer USA Holdings Inc (NYSE:SC), Bunge Limited (NYSE:BG), and Aluminum Corp. of China Limited (NYSE:ACH). This group of stocks’ market values are closest to BERY’s market value.

View table here if you experience formatting issues.

As you can see these stocks had an average of 28.4 hedge funds with bullish positions and the average amount invested in these stocks was $562 million. That figure was $1455 million in BERY’s case. Axon Enterprise, Inc. (NASDAQ:AAXN) is the most popular stock in this table. On the other hand Aluminum Corp. of China Limited (NYSE:ACH) is the least popular one with only 6 bullish hedge fund positions. Compared to these stocks Berry Global Group Inc (NYSE:BERY) is more popular among hedge funds. Our overall hedge fund sentiment score for BERY is 82.6. 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. Our calculations showed that top 10 most popular stocks among hedge funds returned 41.4% in 2019 and outperformed the S&P 500 ETF (SPY) by 10.1 percentage points. These stocks gained 23% in 2020 through October 30th and still beat the market by 20.1 percentage points. Unfortunately BERY wasn’t nearly as popular as these 10 stocks and hedge funds that were betting on BERY were disappointed as the stock returned 5.2% since the end of the second quarter (through 10/30) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 10 most popular stocks among hedge funds as most of these stocks already outperformed the market in 2020.

Disclosure: None. This article was originally published at Insider Monkey.