Hedge Funds Are Souring On Packaging Corporation Of America (PKG)

We at Insider Monkey have gone over 867 13F filings that hedge funds and prominent investors are required to file by the SEC. The 13F filings show the funds’ and investors’ portfolio positions as of September 30th. In this article, we look at what those funds think of Packaging Corporation Of America (NYSE:PKG) based on that data.

Packaging Corporation Of America (NYSE:PKG) was in 26 hedge funds’ portfolios at the end of September. The all time high for this statistic is 33. PKG investors should pay attention to a decrease in enthusiasm from smart money recently. There were 31 hedge funds in our database with PKG positions at the end of the second quarter. Our calculations also showed that PKG isn’t among the 30 most popular stocks among hedge funds (click for Q3 rankings).

At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, lithium prices have more than doubled over the past year, so we go through lists like the 10 best EV stocks to pick the next Tesla that will deliver a 10x return. Even though we recommend positions in only a tiny fraction of the companies we analyze, we check out as many stocks as we can. Now we’re going to take a glance at the key hedge fund action encompassing Packaging Corporation Of America (NYSE:PKG).


Israel Englander of Millennium Management

Do Hedge Funds Think PKG Is A Good Stock To Buy Now?

At third quarter’s end, a total of 26 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -16% from one quarter earlier. By comparison, 23 hedge funds held shares or bullish call options in PKG 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.

Among these funds, AQR Capital Management held the most valuable stake in Packaging Corporation Of America (NYSE:PKG), which was worth $128.7 million at the end of the third quarter. On the second spot was Millennium Management which amassed $55.7 million worth of shares. Citadel Investment Group, Point72 Asset Management, and Renaissance Technologies were also very fond of the stock, becoming one of the largest hedge fund holders of the company. In terms of the portfolio weights assigned to each position Appian Way Asset Management allocated the biggest weight to Packaging Corporation Of America (NYSE:PKG), around 2.13% of its 13F portfolio. Quantinno Capital is also relatively very bullish on the stock, designating 0.34 percent of its 13F equity portfolio to PKG.

Since Packaging Corporation Of America (NYSE:PKG) has witnessed bearish sentiment from hedge fund managers, it’s safe to say that there is a sect of hedge funds who were dropping their full holdings heading into Q4. Interestingly, Dmitry Balyasny’s Balyasny Asset Management dropped the biggest position of the “upper crust” of funds watched by Insider Monkey, valued at close to $30.3 million in stock, and Phill Gross and Robert Atchinson’s Adage Capital Management was right behind this move, as the fund cut about $12.9 million worth. These transactions are important to note, as total hedge fund interest was cut by 5 funds heading into Q4.

Let’s check out hedge fund activity in other stocks – not necessarily in the same industry as Packaging Corporation Of America (NYSE:PKG) but similarly valued. We will take a look at Telefonica Brasil SA (NYSE:VIV), The J.M. Smucker Company (NYSE:SJM), W.R. Berkley Corporation (NYSE:WRB), Fidelity National Financial Inc (NYSE:FNF), Lincoln National Corporation (NYSE:LNC), SoFi Technologies Inc. (NASDAQ:SOFI), and Discovery Inc. (NASDAQ:DISCA). This group of stocks’ market caps match PKG’s market cap.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
VIV 5 42334 -4
SJM 25 506030 -9
WRB 26 593633 -10
FNF 32 1390536 -2
LNC 29 734657 -1
SOFI 33 852850 -6
DISCA 42 515818 -2
Average 27.4 662265 -4.9

View table here if you experience formatting issues.

As you can see these stocks had an average of 27.4 hedge funds with bullish positions and the average amount invested in these stocks was $662 million. That figure was $281 million in PKG’s case. Discovery Inc. (NASDAQ:DISCA) is the most popular stock in this table. On the other hand Telefonica Brasil SA (NYSE:VIV) is the least popular one with only 5 bullish hedge fund positions. Packaging Corporation Of America (NYSE:PKG) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for PKG is 52. 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 negative signal and we’d rather spend our time researching stocks that hedge funds are piling on. Our calculations showed that top 5 most popular stocks among hedge funds returned 95.8% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 40 percentage points. These stocks gained 31.1% in 2021 through December 9th and surpassed the market again by 5.1 percentage points. Unfortunately PKG wasn’t nearly as popular as these 5 stocks (hedge fund sentiment was quite bearish); PKG investors were disappointed as the stock returned -6% since the end of September (through 12/9) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 5 most popular stocks among hedge funds as most of these stocks already outperformed the market in 2021.

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