Did Hedge Funds Make The Right Call On Berry Global Group Inc (BERY) ?

Insider Monkey has processed numerous 13F filings of hedge funds and successful value investors to create an extensive database of hedge fund holdings. The 13F filings show the hedge funds’ and successful investors’ positions as of the end of the first quarter. You can find articles about an individual hedge fund’s trades on numerous financial news websites. However, in this article we will take a look at their collective moves over the last 4.5 years and analyze what the smart money thinks of Berry Global Group Inc (NYSE:BERY) based on that data and determine whether they were really smart about the stock.

Is Berry Global Group Inc (NYSE:BERY) a buy right now? Investors who are in the know were getting less bullish. The number of bullish hedge fund positions decreased by 13 recently. Our calculations also showed that BERY 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). BERY was in 34 hedge funds’ portfolios at the end of the first quarter of 2020. There were 47 hedge funds in our database with BERY holdings at the end of the previous quarter.

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

If you’d ask most shareholders, hedge funds are perceived as worthless, old investment tools of the past. While there are more than 8000 funds with their doors open at present, Our researchers look at the aristocrats of this club, about 850 funds. These money managers preside over bulk of the hedge fund industry’s total capital, and by following their unrivaled investments, Insider Monkey has uncovered several investment strategies that have historically surpassed the S&P 500 index. Insider Monkey’s flagship short hedge fund strategy outstripped the S&P 500 short ETFs by around 20 percentage points annually since its inception in March 2017. Our portfolio of short stocks lost 36% since February 2017 (through May 18th) even though the market was up 30% during the same period. We just shared a list of 8 short targets in our latest quarterly update .

Josh Friedman Canyon Capital

Joshua Friedman of Canyon Capital Advisors

At Insider Monkey we scour multiple sources to uncover the next great investment idea. There is a lot of volatility in the markets and this presents amazing investment opportunities from time to time. For example, this trader claims to deliver juiced up returns with one trade a week, so we are checking out his highest conviction idea. A second trader claims to score lucrative profits by utilizing a “weekend trading strategy”, so we look into his strategy’s picks. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. We recently recommended several stocks partly inspired by legendary Bill Miller’s investor letter. 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 glance at the new hedge fund action surrounding Berry Global Group Inc (NYSE:BERY).

How have hedgies been trading Berry Global Group Inc (NYSE:BERY)?

Heading into the second quarter of 2020, a total of 34 of the hedge funds tracked by Insider Monkey were long this stock, a change of -28% from the previous quarter. On the other hand, there were a total of 40 hedge funds with a bullish position in BERY a year ago. So, let’s examine which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

The largest stake in Berry Global Group Inc (NYSE:BERY) was held by Eminence Capital, which reported holding $418.6 million worth of stock at the end of September. It was followed by Canyon Capital Advisors with a $338.4 million position. Other investors bullish on the company included Orbis Investment Management, Two Creeks Capital Management, and Lyrical Asset Management. In terms of the portfolio weights assigned to each position SCW Capital Management allocated the biggest weight to Berry Global Group Inc (NYSE:BERY), around 16.72% of its 13F portfolio. Canyon Capital Advisors is also relatively very bullish on the stock, earmarking 11.95 percent of its 13F equity portfolio to BERY.

Judging by the fact that Berry Global Group Inc (NYSE:BERY) has witnessed bearish sentiment from the entirety of the hedge funds we track, it’s safe to say that there exists a select few money managers who were dropping their positions entirely in the first quarter. At the top of the heap, Steve Cohen’s Point72 Asset Management sold off the largest stake of all the hedgies monitored by Insider Monkey, totaling about $25.7 million in stock. John Overdeck and David Siegel’s fund, Two Sigma Advisors, also sold off its stock, about $11.6 million worth. These bearish behaviors are intriguing to say the least, as total hedge fund interest dropped by 13 funds in the first quarter.

Let’s check out hedge fund activity in other stocks – not necessarily in the same industry as Berry Global Group Inc (NYSE:BERY) but similarly valued. We will take a look at PLDT Inc. (NYSE:PHI), IDACORP Inc (NYSE:IDA), Store Capital Corporation (NYSE:STOR), and Stericycle Inc (NASDAQ:SRCL). All of these stocks’ market caps match BERY’s market cap.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
PHI 7 74090 0
IDA 24 282100 0
STOR 25 443966 5
SRCL 20 571854 -4
Average 19 343003 0.25

View table here if you experience formatting issues.

As you can see these stocks had an average of 19 hedge funds with bullish positions and the average amount invested in these stocks was $343 million. That figure was $1207 million in BERY’s case. Store Capital Corporation (NYSE:STOR) is the most popular stock in this table. On the other hand PLDT Inc. (NYSE:PHI) is the least popular one with only 7 bullish hedge fund positions. Compared to these stocks Berry Global Group Inc (NYSE:BERY) is more popular among hedge funds. Our calculations showed that top 10 most popular stocks among hedge funds returned 41.4% in 2019 and outperformed the S&P 500 ETF (SPY) by 10.1 percentage points. These stocks returned 12.3% in 2020 through June 30th but still managed to beat the market by 15.5 percentage points. Hedge funds were also right about betting on BERY as the stock returned 31.5% in Q2 and outperformed the market by an even larger margin. Hedge funds were clearly right about piling into this stock relative to other stocks with similar market capitalizations.

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