Hedge Funds Are Dumping Graphic Packaging Holding Company (GPK)

The financial regulations require hedge funds and wealthy investors that exceeded the $100 million equity holdings threshold to file a report that shows their positions at the end of every quarter. Even though it isn’t the intention, these filings to a certain extent level the playing field for ordinary investors. The latest round of 13F filings disclosed the funds’ positions on March 31st, about a week after the S&P 500 Index bottomed. We at Insider Monkey have made an extensive database of more than 821 of those established hedge funds and famous value investors’ filings. In this article, we analyze how these elite funds and prominent investors traded Graphic Packaging Holding Company (NYSE:GPK) based on those filings.

Graphic Packaging Holding Company (NYSE:GPK) was in 33 hedge funds’ portfolios at the end of March. GPK investors should pay attention to a decrease in hedge fund sentiment in recent months. There were 39 hedge funds in our database with GPK holdings at the end of the previous quarter. Our calculations also showed that GPK 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.

According to most investors, hedge funds are assumed to be unimportant, old financial vehicles of the past. While there are greater than 8000 funds with their doors open at present, Our researchers hone in on the aristocrats of this group, approximately 850 funds. Most estimates calculate that this group of people command the majority of the hedge fund industry’s total asset base, and by observing their best investments, Insider Monkey has determined various investment strategies that have historically outperformed the market. Insider Monkey’s flagship short hedge fund strategy outperformed the S&P 500 short ETFs by around 20 percentage points per year 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 .

David Brown Hawk Ridge Partners

David Brown of Hawk Ridge Management

At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, 2020’s unprecedented market conditions provide us with the highest number of trading opportunities in a decade. So we are checking out trades like this one. We interview hedge fund managers and ask them about their best ideas. If you want to find out the best healthcare stock to buy right now, you can watch our latest hedge fund manager interview here. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. Our best call in 2020 was shorting the market when the S&P 500 was trading at 3150 after realizing the coronavirus pandemic’s significance before most investors. Keeping this in mind let’s take a gander at the fresh hedge fund action encompassing Graphic Packaging Holding Company (NYSE:GPK).

What have hedge funds been doing with Graphic Packaging Holding Company (NYSE:GPK)?

Heading into the second quarter of 2020, a total of 33 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -15% from the previous quarter. The graph below displays the number of hedge funds with bullish position in GPK over the last 18 quarters. So, let’s see which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

The largest stake in Graphic Packaging Holding Company (NYSE:GPK) was held by Citadel Investment Group, which reported holding $115.7 million worth of stock at the end of September. It was followed by D E Shaw with a $45.2 million position. Other investors bullish on the company included Marshall Wace LLP, 12th Street Asset Management, and AQR Capital Management. In terms of the portfolio weights assigned to each position Anchor Bolt Capital allocated the biggest weight to Graphic Packaging Holding Company (NYSE:GPK), around 13.75% of its 13F portfolio. 12th Street Asset Management is also relatively very bullish on the stock, designating 9.36 percent of its 13F equity portfolio to GPK.

Due to the fact that Graphic Packaging Holding Company (NYSE:GPK) has witnessed falling interest from hedge fund managers, we can see that there is a sect of money managers who were dropping their full holdings heading into Q4. It’s worth mentioning that Andrew Kurita’s Kettle Hill Capital Management dropped the biggest stake of all the hedgies followed by Insider Monkey, comprising an estimated $35.9 million in stock, and James Dinan’s York Capital Management was right behind this move, as the fund cut about $18.8 million worth. These moves are important to note, as aggregate hedge fund interest was cut by 6 funds heading into Q4.

Let’s now review hedge fund activity in other stocks – not necessarily in the same industry as Graphic Packaging Holding Company (NYSE:GPK) but similarly valued. We will take a look at Neogen Corporation (NASDAQ:NEOG), Leggett & Platt, Inc. (NYSE:LEG), Adaptive Biotechnologies Corporation (NASDAQ:ADPT), and Alaska Air Group, Inc. (NYSE:ALK). All of these stocks’ market caps are similar to GPK’s market cap.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
NEOG 16 33336 0
LEG 25 70786 -2
ADPT 18 1592264 -4
ALK 27 263441 -12
Average 21.5 489957 -4.5

View table here if you experience formatting issues.

As you can see these stocks had an average of 21.5 hedge funds with bullish positions and the average amount invested in these stocks was $490 million. That figure was $340 million in GPK’s case. Alaska Air Group, Inc. (NYSE:ALK) is the most popular stock in this table. On the other hand Neogen Corporation (NASDAQ:NEOG) is the least popular one with only 16 bullish hedge fund positions. Compared to these stocks Graphic Packaging Holding Company (NYSE:GPK) 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 gained 8.3% in 2020 through the end of May but still managed to beat the market by 13.2 percentage points. Hedge funds were also right about betting on GPK, though not to the same extent, as the stock returned 18.6% in Q2 (through the end of May) and outperformed the market as well.

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