Were Hedge Funds Right About Piling Into Ball Corporation (BLL)?

How do you pick the next stock to invest in? One way would be to spend days of research browsing through thousands of publicly traded companies. However, an easier way is to look at the stocks that smart money investors are collectively bullish on. Hedge funds and other institutional investors usually invest large amounts of capital and have to conduct due diligence while choosing their next pick. They don’t always get it right, but, on average, their stock picks historically generated strong returns after adjusting for known risk factors. With this in mind, let’s take a look at the recent hedge fund activity surrounding Ball Corporation (NYSE:BLL).

Ball Corporation (NYSE:BLL) was in 44 hedge funds’ portfolios at the end of December. The all time high for this statistic is 44. This means the bullish number of hedge fund positions in this stock currently sits at its all time high. BLL has seen an increase in support from the world’s most elite money managers recently. There were 33 hedge funds in our database with BLL positions at the end of the third quarter. Our calculations also showed that BLL isn’t among the 30 most popular stocks among hedge funds (click for Q4 rankings).

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 S&P 500 ETFs by more than 124 percentage points since March 2017 (see the details here). We have been able to outperform the passive index funds by tracking the moves of corporate insiders and hedge funds, and we believe small investors can benefit a lot from reading hedge fund investor letters and 13F filings.

Daniel Sundheim of D1 Capital Partners

At Insider Monkey we leave no stone unturned when looking for 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 best hydrogen fuel cell 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 take a gander at the fresh hedge fund action regarding Ball Corporation (NYSE:BLL).

Do Hedge Funds Think BLL Is A Good Stock To Buy Now?

Heading into the first quarter of 2021, a total of 44 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 33% from the third quarter of 2020. Below, you can check out the change in hedge fund sentiment towards BLL over the last 22 quarters. With hedgies’ positions undergoing their usual ebb and flow, there exists a select group of noteworthy hedge fund managers who were adding to their stakes considerably (or already accumulated large positions).

According to Insider Monkey’s hedge fund database, Chilton Investment Company, managed by Richard Chilton, holds the number one position in Ball Corporation (NYSE:BLL). Chilton Investment Company has a $299.2 million position in the stock, comprising 8.5% of its 13F portfolio. Sitting at the No. 2 spot is D1 Capital Partners, led by Daniel Sundheim, holding a $144.1 million position; 0.7% of its 13F portfolio is allocated to the stock. Remaining hedge funds and institutional investors that hold long positions consist of Greg Poole’s Echo Street Capital Management, David Cohen and Harold Levy’s Iridian Asset Management and Richard Merage’s MIG Capital. In terms of the portfolio weights assigned to each position Chilton Investment Company allocated the biggest weight to Ball Corporation (NYSE:BLL), around 8.54% of its 13F portfolio. Bluegrass Capital Partners is also relatively very bullish on the stock, dishing out 7.97 percent of its 13F equity portfolio to BLL.

Now, some big names were leading the bulls’ herd. Arrowstreet Capital, managed by Peter Rathjens, Bruce Clarke and John Campbell, created the most valuable position in Ball Corporation (NYSE:BLL). Arrowstreet Capital had $9.5 million invested in the company at the end of the quarter. Joseph Cornell’s Bluegrass Capital Partners also initiated a $9.3 million position during the quarter. The other funds with new positions in the stock are Mark R. Freeman’s Socorro Asset Management, Peter Avellone’s Cartenna Capital, and Louis Navellier’s Navellier & Associates.

Let’s now review hedge fund activity in other stocks similar to Ball Corporation (NYSE:BLL). These stocks are Schlumberger Limited. (NYSE:SLB), Copart, Inc. (NASDAQ:CPRT), Datadog, Inc. (NASDAQ:DDOG), Chunghwa Telecom Co., Ltd (NYSE:CHT), PACCAR Inc (NASDAQ:PCAR), Bilibili Inc. (NASDAQ:BILI), and Eversource Energy (NYSE:ES). This group of stocks’ market caps resemble BLL’s market cap.

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As you can see these stocks had an average of 36.7 hedge funds with bullish positions and the average amount invested in these stocks was $1348 million. That figure was $944 million in BLL’s case. Datadog, Inc. (NASDAQ:DDOG) is the most popular stock in this table. On the other hand Chunghwa Telecom Co., Ltd (NYSE:CHT) is the least popular one with only 5 bullish hedge fund positions. Ball Corporation (NYSE:BLL) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for BLL is 81.5. 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 positive signal but we’d rather spend our time researching stocks that hedge funds are piling on. Our calculations showed that top 10 most popular stocks among hedge funds returned 90.7% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 35 percentage points. These stocks gained 13.6% in 2021 through April 30th and beat the market again by 1.6 percentage points. Unfortunately BLL wasn’t nearly as popular as these 10 stocks and hedge funds that were betting on BLL were disappointed as the stock returned 0.7% since the end of December (through 4/30) 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 many of these stocks already outperformed the market since 2019.

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

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