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Hedge Funds Souring On Silgan Holdings Inc. (SLGN)

Insider Monkey has processed numerous 13F filings of hedge funds and successful value investors to create an extensive database of hedge fund holdings. The 13F filings show the hedge funds’ and successful investors’ positions as of the end of the first quarter. You can find articles about an individual hedge fund’s trades on numerous financial news websites. However, in this article we will take a look at their collective moves over the last 4.5 years and analyze what the smart money thinks of Silgan Holdings Inc. (NASDAQ:SLGN) based on that data.

Silgan Holdings Inc. (NASDAQ:SLGN) was in 16 hedge funds’ portfolios at the end of March. SLGN has experienced a decrease in activity from the world’s largest hedge funds recently. There were 17 hedge funds in our database with SLGN positions at the end of the previous quarter. Our calculations also showed that SLGN 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.

In the financial world there are a large number of tools investors have at their disposal to grade stocks. A pair of the most under-the-radar tools are hedge fund and insider trading indicators. We have shown that, historically, those who follow the top picks of the best fund managers can outperform the broader indices by a solid amount. Insider Monkey’s monthly stock picks returned 101% since March 2017 and outperformed the S&P 500 ETFs by more than 58 percentage points. Our short strategy outperformed the S&P 500 short ETFs by 20 percentage points annually (see the details here). That’s why we believe hedge fund sentiment is a useful indicator that investors should pay attention to.

GOTHAM ASSET MANAGEMENT

Joel Greenblatt of Gotham Asset Management

At Insider Monkey we scour multiple sources to uncover the next great investment idea. For example, we take a look at lists like the 10 PayPal alternatives for international payments to identify emerging companies that are likely to deliver 1000% gains in the coming years. We interview hedge fund managers and ask them about their best ideas. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. For example we are checking out stocks recommended/scorned by legendary Bill Miller. Our best call in 2020 was shorting the market when the S&P 500 was trading at 3150 in February after realizing the coronavirus pandemic’s significance before most investors. Keeping this in mind let’s view the latest hedge fund action regarding Silgan Holdings Inc. (NASDAQ:SLGN).

How are hedge funds trading Silgan Holdings Inc. (NASDAQ:SLGN)?

At the end of the first quarter, a total of 16 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -6% from the fourth quarter of 2019. Below, you can check out the change in hedge fund sentiment towards SLGN over the last 18 quarters. With hedgies’ capital changing hands, there exists a select group of noteworthy hedge fund managers who were upping their holdings considerably (or already accumulated large positions).

Is SLGN A Good Stock To Buy?

According to Insider Monkey’s hedge fund database, Cardinal Capital, managed by Amy Minella, holds the most valuable position in Silgan Holdings Inc. (NASDAQ:SLGN). Cardinal Capital has a $117.8 million position in the stock, comprising 5.8% of its 13F portfolio. The second most bullish fund manager is Cliff Asness of AQR Capital Management, with a $33.5 million position; the fund has 0.1% of its 13F portfolio invested in the stock. Remaining peers that are bullish encompass Renaissance Technologies, D. E. Shaw’s D E Shaw and Ken Griffin’s Citadel Investment Group. In terms of the portfolio weights assigned to each position Cardinal Capital allocated the biggest weight to Silgan Holdings Inc. (NASDAQ:SLGN), around 5.79% of its 13F portfolio. Quantinno Capital is also relatively very bullish on the stock, earmarking 0.39 percent of its 13F equity portfolio to SLGN.

Since Silgan Holdings Inc. (NASDAQ:SLGN) has experienced bearish sentiment from hedge fund managers, we can see that there were a few hedge funds that decided to sell off their positions entirely heading into Q4. Intriguingly, Israel Englander’s Millennium Management dumped the biggest investment of all the hedgies monitored by Insider Monkey, worth close to $6 million in stock. Steve Cohen’s fund, Point72 Asset Management, also dumped its stock, about $0.5 million worth. These transactions are interesting, as aggregate hedge fund interest fell by 1 funds heading into Q4.

Let’s go over hedge fund activity in other stocks – not necessarily in the same industry as Silgan Holdings Inc. (NASDAQ:SLGN) but similarly valued. We will take a look at The Middleby Corporation (NASDAQ:MIDD), Momenta Pharmaceuticals, Inc. (NASDAQ:MNTA), Manhattan Associates, Inc. (NASDAQ:MANH), and LG Display Co Ltd. (NYSE:LPL). This group of stocks’ market caps are similar to SLGN’s market cap.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
MIDD 26 85040 -9
MNTA 36 666857 3
MANH 20 199741 -4
LPL 4 4761 1
Average 21.5 239100 -2.25

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 $239 million. That figure was $177 million in SLGN’s case. Momenta Pharmaceuticals, Inc. (NASDAQ:MNTA) is the most popular stock in this table. On the other hand LG Display Co Ltd. (NYSE:LPL) is the least popular one with only 4 bullish hedge fund positions. Silgan Holdings Inc. (NASDAQ:SLGN) is not the least popular stock in this group but hedge fund interest is still below average. 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 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 13.3% in 2020 through June 25th and surpassed the market by 16.8 percentage points. Unfortunately SLGN wasn’t nearly as popular as these 10 stocks (hedge fund sentiment was quite bearish); SLGN investors were disappointed as the stock returned 8.1% during the second quarter 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 in 2020.

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