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Ardagh Group S.A. (ARD): Are Hedge Funds Right About This Stock?

We at Insider Monkey have gone over 821 13F filings that hedge funds and prominent investors are required to file by the SEC The 13F filings show the funds’ and investors’ portfolio positions as of March 31st, near the height of the coronavirus market crash. In this article, we look at what those funds think of Ardagh Group S.A. (NYSE:ARD) based on that data.

Is Ardagh Group S.A. (NYSE:ARD) worth your attention right now? The smart money is in a bearish mood. The number of bullish hedge fund bets were cut by 1 recently. Our calculations also showed that ARD isn’t among the 30 most popular stocks among hedge funds (click for Q1 rankings and see the video for a quick look at the top 5 stocks). ARD was in 8 hedge funds’ portfolios at the end of March. There were 9 hedge funds in our database with ARD positions at the end of the previous quarter.

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

Today there are a large number of formulas investors use to size up stocks. A pair of the best formulas are hedge fund and insider trading moves. Our experts have shown that, historically, those who follow the top picks of the elite money managers can beat the market by a significant margin (see the details here).

Josh Friedman Canyon Capital

Joshua Friedman of Canyon Capital Advisors

At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, We take a look at lists like the 10 most profitable companies in the world to identify the compounders that are likely to deliver double digit returns. We interview hedge fund managers and ask them about their best ideas. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. For example we are checking out stocks recommended/scorned by legendary Bill Miller. Our best call in 2020 was shorting the market when the S&P 500 was trading at 3150 in February after realizing the coronavirus pandemic’s significance before most investors. Keeping this in mind let’s take a peek at the new hedge fund action surrounding Ardagh Group S.A. (NYSE:ARD).

How have hedgies been trading Ardagh Group S.A. (NYSE:ARD)?

At the end of the first quarter, a total of 8 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -11% from the previous quarter. Below, you can check out the change in hedge fund sentiment towards ARD over the last 18 quarters. With the smart money’s sentiment swirling, there exists a select group of key hedge fund managers who were boosting their holdings meaningfully (or already accumulated large positions).

Among these funds, Canyon Capital Advisors held the most valuable stake in Ardagh Group S.A. (NYSE:ARD), which was worth $34.5 million at the end of the third quarter. On the second spot was Renaissance Technologies which amassed $12.4 million worth of shares. Arrowstreet Capital, Citadel Investment Group, and Two Sigma Advisors were also very fond of the stock, becoming one of the largest hedge fund holders of the company. In terms of the portfolio weights assigned to each position Canyon Capital Advisors allocated the biggest weight to Ardagh Group S.A. (NYSE:ARD), around 1.22% of its 13F portfolio. Weld Capital Management is also relatively very bullish on the stock, designating 0.08 percent of its 13F equity portfolio to ARD.

Due to the fact that Ardagh Group S.A. (NYSE:ARD) has witnessed a decline in interest from hedge fund managers, it’s safe to say that there were a few money managers that decided to sell off their positions entirely in the first quarter. Intriguingly, D. E. Shaw’s D E Shaw dropped the largest position of the “upper crust” of funds followed by Insider Monkey, comprising close to $0.9 million in stock, and Israel Englander’s Millennium Management was right behind this move, as the fund sold off about $0.6 million worth. These moves are intriguing to say the least, as total hedge fund interest was cut by 1 funds in the first quarter.

Let’s go over hedge fund activity in other stocks – not necessarily in the same industry as Ardagh Group S.A. (NYSE:ARD) but similarly valued. These stocks are ACI Worldwide Inc (NASDAQ:ACIW), Novanta Inc. (NASDAQ:NOVT), PTC Therapeutics, Inc. (NASDAQ:PTCT), and Acacia Communications, Inc. (NASDAQ:ACIA). This group of stocks’ market caps are similar to ARD’s market cap.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
ACIW 24 271686 4
NOVT 10 20986 -4
PTCT 28 378361 -6
ACIA 22 693548 -9
Average 21 341145 -3.75

View table here if you experience formatting issues.

As you can see these stocks had an average of 21 hedge funds with bullish positions and the average amount invested in these stocks was $341 million. That figure was $49 million in ARD’s case. PTC Therapeutics, Inc. (NASDAQ:PTCT) is the most popular stock in this table. On the other hand Novanta Inc. (NASDAQ:NOVT) is the least popular one with only 10 bullish hedge fund positions. Compared to these stocks Ardagh Group S.A. (NYSE:ARD) is even less popular than NOVT. Hedge funds dodged a bullet by taking a bearish stance towards ARD. Our calculations showed that the top 10 most popular hedge fund stocks returned 41.4% in 2019 and outperformed the S&P 500 ETF (SPY) by 10.1 percentage points. These stocks gained 12.2% in 2020 through June 17th but managed to beat the market by 14.8 percentage points. Unfortunately ARD wasn’t nearly as popular as these 10 stocks (hedge fund sentiment was very bearish); ARD investors were disappointed as the stock returned 9.4% during the second quarter (through June 17th) 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 so far in 2020.

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