Did Hedge Funds Make The Right Call On AptarGroup, Inc. (ATR)?

The latest 13F reporting period has come and gone, and Insider Monkey have plowed through 821 13F filings that hedge funds and well-known value investors are required to file by the SEC. The 13F filings show the funds’ and investors’ portfolio positions as of March 31st, a week after the market trough. Now, we are almost done with the second quarter. Investors decided to bet on the economic recovery and a stock market rebound. S&P 500 Index returned almost 20% this quarter. In this article you are going to find out whether hedge funds thoughtAptarGroup, Inc. (NYSE:ATR) was a good investment heading into the second quarter and how the stock traded in comparison to the top hedge fund picks.

AptarGroup, Inc. (NYSE:ATR) was in 20 hedge funds’ portfolios at the end of the first quarter of 2020. ATR shareholders have witnessed a decrease in hedge fund sentiment recently. There were 25 hedge funds in our database with ATR holdings at the end of the previous quarter. Our calculations also showed that ATR 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).

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

Why do we pay any attention at all to hedge fund sentiment? Our research has shown that a select group of hedge fund holdings outperformed the S&P 500 ETFs by 58 percentage points since March 2017 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that’ll significantly underperform the market. We have been tracking and sharing the list of these stocks since February 2017 and they lost 36% through May 18th. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.

Bruce Kovner, Caxton Associates LP

Bruce Kovner of Caxton Associates LP

At Insider Monkey we scour multiple sources to uncover the next great investment idea. Hedge fund sentiment towards Tesla reached its all time high at the end of 2019 and Tesla shares more than tripled this year. We are trying to identify other EV revolution winners, so we are checking out this under-the-radar lithium stock. We go through lists like the 10 most profitable companies in the world to pick the best large-cap stocks to buy. 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. Keeping this in mind we’re going to take a look at the new hedge fund action encompassing AptarGroup, Inc. (NYSE:ATR).

How have hedgies been trading AptarGroup, Inc. (NYSE:ATR)?

At the end of the first quarter, a total of 20 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -20% from the previous quarter. Below, you can check out the change in hedge fund sentiment towards ATR over the last 18 quarters. With hedge funds’ positions undergoing their usual ebb and flow, there exists a select group of noteworthy hedge fund managers who were increasing their holdings considerably (or already accumulated large positions).

The largest stake in AptarGroup, Inc. (NYSE:ATR) was held by Adage Capital Management, which reported holding $44.8 million worth of stock at the end of September. It was followed by Citadel Investment Group with a $19.6 million position. Other investors bullish on the company included Royce & Associates, Armistice Capital, and Millennium Management. In terms of the portfolio weights assigned to each position Sabrepoint Capital allocated the biggest weight to AptarGroup, Inc. (NYSE:ATR), around 3.43% of its 13F portfolio. Armistice Capital is also relatively very bullish on the stock, dishing out 0.92 percent of its 13F equity portfolio to ATR.

Since AptarGroup, Inc. (NYSE:ATR) has faced a decline in interest from the aggregate hedge fund industry, it’s safe to say that there lies a certain “tier” of hedge funds that slashed their entire stakes in the first quarter. Intriguingly, Mika Toikka’s AlphaCrest Capital Management said goodbye to the largest position of the “upper crust” of funds monitored by Insider Monkey, worth close to $1.7 million in stock, and Ryan Tolkin (CIO)’s Schonfeld Strategic Advisors was right behind this move, as the fund cut about $1.3 million worth. These transactions are important to note, as aggregate hedge fund interest fell by 5 funds in the first quarter.

Let’s now take a look at hedge fund activity in other stocks similar to AptarGroup, Inc. (NYSE:ATR). We will take a look at PagSeguro Digital Ltd. (NYSE:PAGS), Eastman Chemical Company (NYSE:EMN), American Financial Group, Inc. (NYSE:AFG), and Juniper Networks, Inc. (NYSE:JNPR). This group of stocks’ market caps are similar to ATR’s market cap.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
PAGS 20 490881 -1
EMN 29 233593 -3
AFG 24 200932 -1
JNPR 34 540661 -3
Average 26.75 366517 -2

View table here if you experience formatting issues.

As you can see these stocks had an average of 26.75 hedge funds with bullish positions and the average amount invested in these stocks was $367 million. That figure was $156 million in ATR’s case. Juniper Networks, Inc. (NYSE:JNPR) is the most popular stock in this table. On the other hand PagSeguro Digital Ltd. (NYSE:PAGS) is the least popular one with only 20 bullish hedge fund positions. Compared to these stocks AptarGroup, Inc. (NYSE:ATR) is even less popular than PAGS. Hedge funds dodged a bullet by taking a bearish stance towards ATR. 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 18.6% in 2020 through July 27th but managed to beat the market by 17.1 percentage points. Unfortunately ATR wasn’t nearly as popular as these 10 stocks (hedge fund sentiment was very bearish); ATR investors were disappointed as the stock returned 20.8% since Q1 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.