How do you pick the next stock to invest in? One way would be to spend hours of research browsing through thousands of publicly traded companies. However, an easier way is to look at the stocks that smart money investors are collectively bullish on. Hedge funds and other institutional investors usually invest large amounts of capital and have to conduct due diligence while choosing their next pick. They don’t always get it right, but, on average, their stock picks historically generated strong returns after adjusting for known risk factors. With this in mind, let’s take a look at the recent hedge fund activity surrounding Berry Plastics Group Inc (NYSE:BERY).
Berry Plastics Group Inc (NYSE:BERY) shares haven’t seen a lot of action during the third quarter. Overall, hedge fund sentiment was unchanged. The stock was in 47 hedge funds’ portfolios at the end of the third quarter of 2015. The level and the change in hedge fund popularity aren’t the only variables you need to analyze to decipher hedge funds’ perspectives. A stock may witness a boost in popularity, but it may still be less popular than similarly priced stocks. That’s why at the end of this article we will examine companies such as Autohome Inc (ADR) (NYSE:ATHM), Seaboard Corp (NYSEMKT:SEB), and Umpqua Holdings Corp (NASDAQ:UMPQ) to gather more data points.
To the average investor, there is a multitude of indicators shareholders have at their disposal to assess publicly traded companies. A couple of the most underrated indicators are hedge fund and insider trading interest. We have shown that, historically, those who follow the top picks of the best money managers can outpace the broader indices by a very impressive amount (see the details here).
Now, let’s check out the latest action surrounding Berry Plastics Group Inc (NYSE:BERY).
How have hedgies been trading Berry Plastics Group Inc (NYSE:BERY)?
Heading into Q4, a total of 47 of the hedge funds tracked by Insider Monkey held long positions in this stock, same as the last quarter. With the smart money’s positions undergoing their usual ebb and flow, there exists an “upper tier” of noteworthy hedge fund managers who were increasing their holdings substantially (or already accumulated large positions).
According to publicly available hedge fund and institutional investor holdings data compiled by Insider Monkey, Robert Polak’s Anchor Bolt Capital has the most valuable position in Berry Plastics Group Inc (NYSE:BERY), worth close to $151.4 million, amounting to 5% of its total 13F portfolio. Sitting at the No. 2 spot is Canyon Capital Advisors, managed by Joshua Friedman and Mitchell Julis, which holds a $121.4 million position; the fund has 3.3% of its 13F portfolio invested in the stock. Some other professional money managers with similar optimism include Steve Cohen’s Point72 Asset Management, Joshua Kaufman and Craig Nerenberg’s Brenner West Capital Partners, and Martin D. Sass’ MD Sass.
Due to the fact that Berry Plastics Group Inc (NYSE:BERY) has experienced a falling interest from the aggregate hedge fund industry, it’s easy to see that there lies a certain “tier” of money managers that elected to cut their positions entirely heading into Q4. It’s worth mentioning that Malcolm Fairbairn’s Ascend Capital cut the largest investment of the “upper crust” of funds monitored by Insider Monkey, valued at about $64.6 million in stock. Ross Margolies’ fund, Stelliam Investment Management, also sold off its stock, about $58.3 million worth of shares. These moves are intriguing to say the least, as aggregate hedge fund interest stayed the same (this is a bearish signal in our experience).
Let’s also examine hedge fund activity in other stocks – not necessarily in the same industry as Berry Plastics Group Inc (NYSE:BERY) but similarly valued. We will take a look at Autohome Inc (ADR) (NYSE:ATHM), Seaboard Corp (NYSEMKT:SEB), Umpqua Holdings Corp (NASDAQ:UMPQ), and National Instruments Corp (NASDAQ:NATI). This group of stocks’ market valuations matches Berry Plastics Group Inc (NYSE:BERY)’s market valuation.
|Ticker||No of HFs with positions||Total Value of HF Positions (x1000)||Change in HF Position|
As you can see, these stocks had an average of 14 hedge funds with bullish positions and the average amount invested in these stocks was $248 million. That figure was $1.10 billion in Berry Plastics Group Inc (NYSE:BERY)’s case. Umpqua Holdings Corp (NASDAQ:UMPQ) is the most popular stock in this table. On the other hand, Seaboard Corp (NYSEMKT:SEB) is the least popular one with only 7 bullish hedge fund positions. Compared to these stocks, Berry Plastics Group Inc (NYSE:BERY) is more popular among hedge funds. Considering that hedge funds are fond of this stock in relation to its market cap peers, it may be a good idea to analyze it in detail and potentially include it in your portfolio.