Hedge Funds Are Buying Sonoco Products Company (SON): Packaging Corp Of America (PKG), Owens-Illinois Inc (OI)

Sonoco Products Company (NYSE:SON) was in 16 hedge funds’ portfolio at the end of December. SON investors should be aware of an increase in hedge fund interest in recent months. There were 13 hedge funds in our database with SON holdings at the end of the previous quarter.

Sonoco Products Company (NYSE:SON)

In the eyes of most traders, hedge funds are viewed as underperforming, old investment vehicles of years past. While there are greater than 8000 funds in operation at the moment, we at Insider Monkey look at the moguls of this group, close to 450 funds. Most estimates calculate that this group oversees the lion’s share of the smart money’s total asset base, and by keeping an eye on their highest performing stock picks, we have uncovered a number of investment strategies that have historically outpaced the market. Our small-cap hedge fund strategy outperformed the S&P 500 index by 18 percentage points annually for a decade in our back tests, and since we’ve started sharing our picks with our subscribers at the end of August 2012, we have outperformed the S&P 500 index by 25 percentage points in 6.5 month (see all of our picks from August).

Equally as integral, bullish insider trading sentiment is a second way to break down the financial markets. Just as you’d expect, there are plenty of stimuli for a corporate insider to sell shares of his or her company, but just one, very clear reason why they would initiate a purchase. Various academic studies have demonstrated the market-beating potential of this method if investors know where to look (learn more here).

Consequently, we’re going to take a look at the recent action encompassing Sonoco Products Company (NYSE:SON).

How have hedgies been trading Sonoco Products Company (NYSE:SON)?

At the end of the fourth quarter, a total of 16 of the hedge funds we track were long in this stock, a change of 23% from one quarter earlier. With hedge funds’ positions undergoing their usual ebb and flow, there exists a select group of notable hedge fund managers who were boosting their stakes substantially.

Of the funds we track, Royce & Associates, managed by Chuck Royce, holds the most valuable position in Sonoco Products Company (NYSE:SON). Royce & Associates has a $42 million position in the stock, comprising 0.1% of its 13F portfolio. On Royce & Associates’s heels is Ken Griffin of Citadel Investment Group, with a $15 million position; 0.2% of its 13F portfolio is allocated to the company. Other hedgies with similar optimism include Ken Gray and Steve Walsh’s Bryn Mawr Capital, Israel Englander’s Millennium Management and Mario Gabelli’s GAMCO Investors.

As aggregate interest increased, key hedge funds were leading the bulls’ herd. Dialectic Capital Management, managed by John Fichthorn, established the most valuable position in Sonoco Products Company (NYSE:SON). Dialectic Capital Management had 2 million invested in the company at the end of the quarter. Glenn Russell Dubin’s Highbridge Capital Management also initiated a $1 million position during the quarter. The following funds were also among the new SON investors: Paul Tudor Jones’s Tudor Investment Corp and Cliff Asness’s AQR Capital Management.

How are insiders trading Sonoco Products Company (NYSE:SON)?

Insider purchases made by high-level executives is best served when the company in question has seen transactions within the past 180 days. Over the last six-month time period, Sonoco Products Company (NYSE:SON) has experienced zero unique insiders purchasing, and 8 insider sales (see the details of insider trades here).

Let’s also take a look at hedge fund and insider activity in other stocks similar to Sonoco Products Company (NYSE:SON). These stocks are Packaging Corp Of America (NYSE:PKG), Owens-Illinois Inc (NYSE:OI), Silgan Holdings Inc. (NASDAQ:SLGN), Bemis Company, Inc. (NYSE:BMS), and AptarGroup, Inc. (NYSE:ATR). All of these stocks are in the packaging & containers industry and their market caps are closest to SON’s market cap.

Company Name # of Hedge Funds # of Insiders Buying # of Insiders Selling
Packaging Corp Of America (NYSE:PKG) 20 0 6
Owens-Illinois Inc (NYSE:OI) 27 3 3
Silgan Holdings Inc. (NASDAQ:SLGN) 14 0 6
Bemis Company, Inc. (NYSE:BMS) 11 0 2
AptarGroup, Inc. (NYSE:ATR) 9 1 6

With the returns demonstrated by our tactics, everyday investors should always monitor hedge fund and insider trading sentiment, and Sonoco Products Company (NYSE:SON) is no exception.

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