Hedge funds and large money managers usually invest with a focus on the long-term horizon and, therefore, short-lived dips or bumps on the charts usually don’t make them change their opinion towards a company. This time it may be different. The coronavirus pandemic destroyed the high correlations among major industries and asset classes. We are now in a stock pickers market where fundamentals of a stock have more effect on the price than the overall direction of the market. As a result we observe sudden and large changes in hedge fund positions depending on the news flow. Let’s take a look at the hedge fund sentiment towards Amcor plc (NYSE:AMCR) to find out whether there were any major changes in hedge funds’ views.
Is AMCR a good stock to buy now? Amcor plc (NYSE:AMCR) investors should pay attention to an increase in activity from the world’s largest hedge funds recently. Amcor plc (NYSE:AMCR) was in 18 hedge funds’ portfolios at the end of the third quarter of 2020. The all time high for this statistic is 19. There were 16 hedge funds in our database with AMCR holdings at the end of June. Our calculations also showed that AMCR isn’t among the 30 most popular stocks among hedge funds (click for Q3 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 was able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by more than 66 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’ll significantly underperform the market. We have been tracking and sharing the list of these stocks since February 2017 and they lost 13% through November 17th. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
At Insider Monkey we scour multiple sources to uncover the next great investment idea. For example, Federal Reserve has been creating trillions of dollars electronically to keep the interest rates near zero. We believe this will lead to inflation and boost real estate prices. So, we recommended this real estate stock to our monthly premium newsletter subscribers. We go through lists like the 15 best blue chip stocks to pick the best large-cap stocks to buy. Even though we recommend positions in only a tiny fraction of the companies we analyze, we check out as many stocks as we can. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. You can subscribe to our free daily newsletter on our website. Keeping this in mind let’s check out the new hedge fund action regarding Amcor plc (NYSE:AMCR).
Do Hedge Funds Think AMCR Is A Good Stock To Buy Now?
At the end of September, a total of 18 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 13% from the second quarter of 2020. Below, you can check out the change in hedge fund sentiment towards AMCR over the last 21 quarters. 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, Polaris Capital Management held the most valuable stake in Amcor plc (NYSE:AMCR), which was worth $143.7 million at the end of the third quarter. On the second spot was Renaissance Technologies which amassed $31.6 million worth of shares. Adage Capital Management, Gotham Asset Management, and Arrowstreet Capital 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 Polaris Capital Management allocated the biggest weight to Amcor plc (NYSE:AMCR), around 7.08% of its 13F portfolio. Gotham Asset Management is also relatively very bullish on the stock, designating 0.26 percent of its 13F equity portfolio to AMCR.
As one would reasonably expect, key hedge funds were breaking ground themselves. Renaissance Technologies, created the biggest position in Amcor plc (NYSE:AMCR). Renaissance Technologies had $31.6 million invested in the company at the end of the quarter. Peter Rathjens, Bruce Clarke and John Campbell’s Arrowstreet Capital also made a $7.3 million investment in the stock during the quarter. The other funds with new positions in the stock are Paul Tudor Jones’s Tudor Investment Corp, Dmitry Balyasny’s Balyasny Asset Management, and Mika Toikka’s AlphaCrest Capital Management.
Let’s check out hedge fund activity in other stocks similar to Amcor plc (NYSE:AMCR). These stocks are Deutsche Bank AG (NYSE:DB), ViacomCBS Inc. (NASDAQ:VIAC), Hologic, Inc. (NASDAQ:HOLX), PT Telekomunikasi Indonesia (NYSE:TLK), Smith & Nephew plc (NYSE:SNN), Horizon Therapeutics Public Limited Company (NASDAQ:HZNP), and Kansas City Southern (NYSE:KSU). This group of stocks’ market values match AMCR’s market value.
|Ticker||No of HFs with positions||Total Value of HF Positions (x1000)||Change in HF Position|
View table here if you experience formatting issues.
As you can see these stocks had an average of 34.4 hedge funds with bullish positions and the average amount invested in these stocks was $1260 million. That figure was $239 million in AMCR’s case. Horizon Therapeutics Public Limited Company (NASDAQ:HZNP) is the most popular stock in this table. On the other hand PT Telekomunikasi Indonesia (NYSE:TLK) is the least popular one with only 8 bullish hedge fund positions. Amcor plc (NYSE:AMCR) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for AMCR is 44.9. 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 20 most popular stocks among hedge funds returned 41.3% in 2019 and outperformed the S&P 500 ETF (SPY) by 10 percentage points. These stocks gained 30.7% in 2020 through December 14th and surpassed the market again by 15.8 percentage points. Unfortunately AMCR wasn’t nearly as popular as these 20 stocks (hedge fund sentiment was quite bearish); AMCR investors were disappointed as the stock returned 3% since the end of September (through 12/14) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 20 most popular stocks among hedge funds as most of these stocks already outperformed the market in 2020.
Disclosure: None. This article was originally published at Insider Monkey.