Graphic Packaging Holding Company (GPK) Fell Out Of Favor With Hedge Funds

The latest 13F reporting period has come and gone, and Insider Monkey is again at the forefront when it comes to making use of this gold mine of data. We at Insider Monkey have plowed through 823 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 June 30th, when the S&P 500 Index was trading around the 3100 level. Stocks kept going up since then. In this article we look at how hedge funds traded Graphic Packaging Holding Company (NYSE:GPK) and determine whether the smart money was really smart about this stock.

Graphic Packaging Holding Company (NYSE:GPK) was in 32 hedge funds’ portfolios at the end of June. The all time high for this statistics is 44. GPK has seen a decrease in hedge fund sentiment lately. There were 33 hedge funds in our database with GPK holdings at the end of March. Our calculations also showed that GPK isn’t among the 30 most popular stocks among hedge funds (click for Q2 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.

In today’s marketplace there are tons of metrics shareholders use to assess their stock investments. A couple of the best metrics are hedge fund and insider trading interest. We have shown that, historically, those who follow the top picks of the top money managers can outpace the S&P 500 by a superb margin (see the details here).

Donald Sussman Paloma Partners

Donald Sussman of Paloma Partners

At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, this “mom” trader turned $2000 into $2 million within 2 years. So, we are checking out her best trade idea of the month. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. 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. With all of this in mind we’re going to review the recent hedge fund action regarding Graphic Packaging Holding Company (NYSE:GPK).

What does smart money think about Graphic Packaging Holding Company (NYSE:GPK)?

At second quarter’s end, a total of 32 of the hedge funds tracked by Insider Monkey were long this stock, a change of -3% from the first quarter of 2020. The graph below displays the number of hedge funds with bullish position in GPK over the last 20 quarters. With hedge funds’ sentiment swirling, there exists an “upper tier” of notable hedge fund managers who were adding to their holdings meaningfully (or already accumulated large positions).

Is GPK A Good Stock To Buy?

The largest stake in Graphic Packaging Holding Company (NYSE:GPK) was held by Eminence Capital, which reported holding $58.7 million worth of stock at the end of September. It was followed by D E Shaw with a $49.5 million position. Other investors bullish on the company included 12th Street Asset Management, Marshall Wace LLP, and AQR Capital Management. In terms of the portfolio weights assigned to each position 12th Street Asset Management allocated the biggest weight to Graphic Packaging Holding Company (NYSE:GPK), around 7.77% of its 13F portfolio. Sandbar Asset Management is also relatively very bullish on the stock, earmarking 1.69 percent of its 13F equity portfolio to GPK.

Judging by the fact that Graphic Packaging Holding Company (NYSE:GPK) has witnessed declining sentiment from hedge fund managers, it’s safe to say that there was a specific group of funds who sold off their positions entirely by the end of the second quarter. Intriguingly, Ken Griffin’s Citadel Investment Group cut the biggest position of the “upper crust” of funds tracked by Insider Monkey, valued at an estimated $115.7 million in stock, and Alexander Mitchell’s Scopus Asset Management was right behind this move, as the fund cut about $5.5 million worth. These transactions are intriguing to say the least, as total hedge fund interest dropped by 1 funds by the end of the second quarter.

Let’s go over hedge fund activity in other stocks similar to Graphic Packaging Holding Company (NYSE:GPK). We will take a look at ChemoCentryx Inc (NASDAQ:CCXI), Amicus Therapeutics, Inc. (NASDAQ:FOLD), Highwoods Properties Inc (NYSE:HIW), QTS Realty Trust Inc (NYSE:QTS), Telecom Argentina S.A. (NYSE:TEO), Performance Food Group Company (NYSE:PFGC), and Hudson Pacific Properties Inc (NYSE:HPP). This group of stocks’ market valuations are closest to GPK’s market valuation.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
CCXI 31 701760 1
FOLD 32 1316185 4
HIW 30 142676 15
QTS 29 513230 8
TEO 3 33682 -1
PFGC 20 215689 -9
HPP 24 437178 5
Average 24.1 480057 3.3

View table here if you experience formatting issues.

As you can see these stocks had an average of 24.1 hedge funds with bullish positions and the average amount invested in these stocks was $480 million. That figure was $274 million in GPK’s case. Amicus Therapeutics, Inc. (NASDAQ:FOLD) is the most popular stock in this table. On the other hand Telecom Argentina S.A. (NYSE:TEO) is the least popular one with only 3 bullish hedge fund positions. Graphic Packaging Holding Company (NYSE:GPK) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for GPK is 75.8. Stocks with higher number of hedge fund positions relative to other stocks as well as relative to their historical range receive a higher sentiment score. This is a slightly positive signal but we’d rather spend our time researching stocks that hedge funds are piling on. 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 gained 23.8% in 2020 through September 14th and beat the market by 17.6 percentage points. Unfortunately GPK wasn’t nearly as popular as these 10 stocks and hedge funds that were betting on GPK were disappointed as the stock returned 2.7% during the same time period 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 many of these stocks already outperformed the market so far this year.

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