Hedge Funds Were Right About KapStone Paper and Packaging Corp. (KS), Is It Time To Sell Following Macquarie Downgrade?

What does the smart money think about KapStone Paper and Packaging Corp. (NYSE:KS)?

Heading into the second quarter, a total of 30 hedge funds were holding long positions in this stock, which is  a change of -25% from the previous quarter. A few hedge fund managers remained bullish on the stock where as others opted to stay out of it for the moment. But, the stats indicate that many hedge funds were bearish on the stock in the first quarter.

According to Insider Monkey’s hedge fund database, D E Shaw, managed by D. E Shaw, holds the largest position in KapStone Paper and Packaging Corp. (NYSE:KS). D E Shaw holds around 3.25 million shares valued at $106.6 million at the end of the first quarter, which accounts for 0.2% of its 13F portfolio. The second-largest stake was held by Perry Capital, managed by Richard Perry, consisting of around 2 million shares valued at $67.5 million and accounting for 2.2% of its 13F portfolio. Some other hedgies that are bullish are David Einhorn‘s Greenlight Capital, and Tom Sandell’s Sandell Asset Management.

Declining interest in KapStone Paper and Packaging Corp. (NYSE:KS) means that some hedge fund managers decided to say good bye to this stock in the first quarter. Kyle Bass’ Hayman Advisors sold around 564,377 shares valued at $16.5 million as of the end of the fourth quarter. Following Kyle Bass is Marko Dimitrijevic’s fund, Everest Capital, which sold around 530,200 shares valued at $15.5 million. These bearish behaviors are not unexpected, as aggregate hedge fund interest fell by 10 funds last quarter.

Considering the very negative hedge fund sentiment on the stock coupled with the seemingly prophetic results, the fairly bearish sentiment among the company’s upper management, and the stock (and industry as a whole) being downgraded by Macquarie, it’s hard to recommend this stock right now, even at its declining price.

Disclosure: None