Ball Corporation (BLL): Are Hedge Funds Right About This Stock?

Hedge funds and large money managers usually invest with a focus on the long-term horizon and, therefore, short-lived dips on the charts, usually don’t make them change their opinion towards a company. The second half of 2015 and the first few months of this year was a stressful period for hedge funds. However, things have been taking a turn for the better in the second half of this year. Small-cap stocks which hedge funds are usually overweight outperformed the market by double digits and it may be a good time to pay attention to hedge funds’ picks before it is too late. In this article we are going to analyze the hedge fund sentiment towards Ball Corporation (NYSE:BLL) to find out whether it was one of their high conviction long-term ideas.

Is Ball Corporation (NYSE:BLL) a buy, sell, or hold? The best stock pickers are undoubtedly actually turning less bullish. The number of bullish hedge fund bets decreased by 7 recently. BLL was in 35 hedge funds’ portfolios at the end of September. There were 42 hedge funds in our database with BLL positions at the end of the previous quarter. At the end of this article we will also compare BLL to other stocks including Skyworks Solutions Inc (NASDAQ:SWKS), Digital Realty Trust, Inc. (NYSE:DLR), and Linear Technology Corporation (NASDAQ:LLTC) to get a better sense of its popularity.

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We follow over 700 hedge funds and other institutional investors and by analyzing their quarterly 13F filings, we identify stocks that they are collectively bullish on and develop investment strategies based on this data. One strategy that outperformed the market over the last year involves selecting the 100 best-performing funds and identifying the 30 mid-cap stocks that they are collectively most bullish on. Over the past year, this strategy generated returns of 18%, topping the 8% gain registered by S&P 500 ETFs. We launched this strategy 2.5 years ago and it returned more than 39% since then, vs. 22% gain registered by the S&P 500 ETFs.

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How are hedge funds trading Ball Corporation (NYSE:BLL)?

At Q3’s end, a total of 35 of the hedge funds tracked by Insider Monkey were long this stock, down by 17% from the second quarter of 2016. The graph below displays the number of hedge funds with bullish position in BLL over the last 5 quarters. So, let’s check out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

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According to publicly available hedge fund and institutional investor holdings data compiled by Insider Monkey, Doug Silverman and Alexander Klabin’s Senator Investment Group has the number one position in Ball Corporation (NYSE:BLL), worth close to $434.3 million, amounting to 5.7% of its total 13F portfolio. The second largest stake is held by Corvex Capital, led by Keith Meister, which holds a $259.5 million position; the fund has 4.9% of its 13F portfolio invested in the stock. Some other members of the smart money that hold long positions include Jacob Doft’s Highline Capital Management, Jim Simons’ Renaissance Technologies and Ken Griffin’s Citadel Investment Group. We should note that none of these hedge funds are among our list of the 100 best performing hedge funds which is based on the performance of their 13F long positions in non-microcap stocks.

Judging by the fact that Ball Corporation (NYSE:BLL) has gone through declining sentiment from the aggregate hedge fund industry, it’s easy to see that there is a sect of hedgies that elected to cut their positions entirely by the end of the third quarter. It’s worth mentioning that Richard Perry’s Perry Capital cut the biggest stake of all the investors followed by Insider Monkey, worth close to $194.5 million in stock, and Richard Barrera’s Roystone Capital Partners was right behind this move, as the fund said goodbye to about $110 million worth of shares.

Let’s now take a look at hedge fund activity in other stocks similar to Ball Corporation (NYSE:BLL). We will take a look at Skyworks Solutions Inc (NASDAQ:SWKS), Digital Realty Trust, Inc. (NYSE:DLR), Linear Technology Corporation (NASDAQ:LLTC), and Goldcorp Inc. (USA) (NYSE:GG). All of these stocks’ market caps match BLL’s market cap.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
SWKS 32 457924 -1
DLR 16 175456 -2
LLTC 31 1625781 6
GG 24 311237 -4

As you can see these stocks had an average of 26 hedge funds with bullish positions and the average amount invested in these stocks was $643 million. That figure was $1.62 billion in BLL’s case. Skyworks Solutions Inc (NASDAQ:SWKS) is the most popular stock in this table. On the other hand Digital Realty Trust, Inc. (NYSE:DLR) is the least popular one with only 16 bullish hedge fund positions. Compared to these stocks Ball Corporation (NYSE:BLL) 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