Packaging Corp Of America (NYSE:PKG): Hedge Funds and Insiders Are Bearish, What Should You Do?

Packaging Corp Of America (NYSE:PKG) was in 20 hedge funds’ portfolio at the end of the fourth quarter of 2012. pkg has experienced a decrease in hedge fund sentiment recently. There were 20 hedge funds in our database with pkg holdings at the end of the previous quarter.

At the moment, there are a multitude of methods shareholders can use to monitor stocks. A pair of the most innovative are hedge fund and insider trading movement. At Insider Monkey, our research analyses have shown that, historically, those who follow the best picks of the elite investment managers can outpace the S&P 500 by a healthy amount (see just how much).

Packaging Corp Of America (NYSE:PKG)Just as key, positive insider trading sentiment is another way to break down the marketplace. There are plenty of incentives for a corporate insider to sell shares of his or her company, but just one, very simple reason why they would initiate a purchase. Plenty of academic studies have demonstrated the market-beating potential of this strategy if piggybackers understand where to look (learn more here).

With all of this in mind, let’s take a gander at the recent action surrounding Packaging Corp Of America (NYSE:PKG).

Hedge fund activity in Packaging Corp Of America (NYSE:PKG)

Heading into 2013, a total of 20 of the hedge funds we track were bullish in this stock, a change of 0% from the third quarter. With hedgies’ sentiment swirling, there exists an “upper tier” of key hedge fund managers who were increasing their holdings significantly.

Of the funds we track, First Eagle Investment Management, managed by Jean-Marie Eveillard, holds the biggest position in Packaging Corp Of America (NYSE:PKG). First Eagle Investment Management has a $165 million position in the stock, comprising 0.6% of its 13F portfolio. On First Eagle Investment Management’s heels is Iridian Asset Management, managed by David Cohen and Harold Levy, which held a $129 million position; the fund has 2.1% of its 13F portfolio invested in the stock. Other hedge funds with similar optimism include Jeffrey Vinik’s Vinik Asset Management, SAC Subsidiary’s CR Intrinsic Investors and Joshua Friedman and Mitchell Julis’s Canyon Capital Advisors.

Since Packaging Corp Of America (NYSE:PKG) has experienced falling interest from the aggregate hedge fund industry, it’s easy to see that there is a sect of funds who were dropping their entire stakes in Q4. At the top of the heap, Richard Schimel’s Diamondback Capital sold off the biggest position of all the hedgies we watch, valued at an estimated $4 million in stock., and Meryl Witmer of Eagle Value Partners was right behind this move, as the fund dropped about $4 million worth. These transactions are important to note, as total hedge fund interest stayed the same (this is a bearish signal in our experience).

What have insiders been doing with Packaging Corp Of America (NYSE:PKG)?

Insider buying is particularly usable when the company in focus has seen transactions within the past 180 days. Over the last half-year time period, Packaging Corp Of America (NYSE:PKG) has seen zero unique insiders purchasing, and 6 insider sales (see the details of insider trades here).

With the returns exhibited by our research, retail investors must always watch hedge fund and insider trading activity, and Packaging Corp Of America (NYSE:PKG) shareholders fit into this picture quite nicely.

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Insider Monkey’s small-cap strategy returned 29.2% between September 2012 and February 2013 versus 8.7% for the S&P 500 index. Try it now by clicking the link above.

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