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Hedge Funds Aren’t Crazy About AptarGroup, Inc. (ATR) Anymore

We at Insider Monkey have gone over 821 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 March 31st, near the height of the coronavirus market crash. In this article, we look at what those funds think of AptarGroup, Inc. (NYSE:ATR) based on that data.

Is AptarGroup, Inc. (NYSE:ATR) a buy here? The best stock pickers are becoming less confident. The number of bullish hedge fund positions fell by 5 in recent months. Our calculations also showed that ATR 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.

Hedge funds’ reputation as shrewd investors has been tarnished in the last decade as their hedged returns couldn’t keep up with the unhedged returns of the market indices. Our research has shown that hedge funds’ small-cap stock picks managed to beat the market by double digits annually between 1999 and 2016, but the margin of outperformance has been declining in recent years. Nevertheless, we were still able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by 58 percentage points since March 2017 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that underperformed the market by 10 percentage points annually between 2006 and 2017. Interestingly the margin of underperformance of these stocks has been increasing in recent years. Investors who are long the market and short these stocks would have returned more than 27% annually between 2015 and 2017. We have been tracking and sharing the list of these stocks since February 2017 in our quarterly newsletter.

Bruce Kovner, Caxton Associates LP

Bruce Kovner of Caxton Associates LP

We leave no stone unturned when looking for the next great investment idea. For example Europe is set to become the world’s largest cannabis market, so we check out this European marijuana stock pitch. We take a look at lists like the 10 most profitable companies in the world to identify the compounders that are likely to deliver double digit returns. 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. Now let’s review the latest hedge fund action encompassing AptarGroup, Inc. (NYSE:ATR).

Hedge fund activity in AptarGroup, Inc. (NYSE:ATR)

At Q1’s end, a total of 20 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -20% from the fourth quarter of 2019. On the other hand, there were a total of 15 hedge funds with a bullish position in ATR a year ago. So, let’s check out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

More specifically, Adage Capital Management was the largest shareholder of AptarGroup, Inc. (NYSE:ATR), with a stake worth $44.8 million reported as of the end of September. Trailing Adage Capital Management was Citadel Investment Group, which amassed a stake valued at $19.6 million. Royce & Associates, Armistice Capital, and Millennium Management 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 Sabrepoint Capital allocated the biggest weight to AptarGroup, Inc. (NYSE:ATR), around 3.43% of its 13F portfolio. Armistice Capital is also relatively very bullish on the stock, earmarking 0.92 percent of its 13F equity portfolio to ATR.

Due to the fact that AptarGroup, Inc. (NYSE:ATR) has witnessed a decline in interest from the aggregate hedge fund industry, it’s easy to see that there lies a certain “tier” of fund managers who were dropping their positions entirely heading into Q4. It’s worth mentioning that Mika Toikka’s AlphaCrest Capital Management dumped the largest stake of the “upper crust” of funds followed by Insider Monkey, totaling an estimated $1.7 million in stock, and Ryan Tolkin (CIO)’s Schonfeld Strategic Advisors was right behind this move, as the fund cut about $1.3 million worth. These transactions are intriguing to say the least, as total hedge fund interest fell by 5 funds heading into Q4.

Let’s go over hedge fund activity in other stocks – not necessarily in the same industry as AptarGroup, Inc. (NYSE:ATR) but similarly valued. We will take a look at PagSeguro Digital Ltd. (NYSE:PAGS), Eastman Chemical Company (NYSE:EMN), American Financial Group, Inc. (NYSE:AFG), and Juniper Networks, Inc. (NYSE:JNPR). This group of stocks’ market caps are closest to ATR’s market cap.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
PAGS 20 490881 -1
EMN 29 233593 -3
AFG 24 200932 -1
JNPR 34 540661 -3
Average 26.75 366517 -2

View table here if you experience formatting issues.

As you can see these stocks had an average of 26.75 hedge funds with bullish positions and the average amount invested in these stocks was $367 million. That figure was $156 million in ATR’s case. Juniper Networks, Inc. (NYSE:JNPR) is the most popular stock in this table. On the other hand PagSeguro Digital Ltd. (NYSE:PAGS) is the least popular one with only 20 bullish hedge fund positions. Compared to these stocks AptarGroup, Inc. (NYSE:ATR) is even less popular than PAGS. Hedge funds dodged a bullet by taking a bearish stance towards ATR. Our calculations showed that the top 10 most popular hedge fund stocks returned 41.4% in 2019 and outperformed the S&P 500 ETF (SPY) by 10.1 percentage points. These stocks gained 12.2% in 2020 through June 17th but managed to beat the market by 14.8 percentage points. Unfortunately ATR wasn’t nearly as popular as these 10 stocks (hedge fund sentiment was very bearish); ATR investors were disappointed as the stock returned 7.7% during the second quarter (through June 17th) 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 most of these stocks already outperformed the market so far in 2020.

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