Is Ardagh Group S.A. (ARD) A Good Stock To Buy ?

We are still in an overall bull market and many stocks that smart money investors were piling into surged through the end of November. Among them, Facebook and Microsoft ranked among the top 3 picks and these stocks gained 54% and 51% respectively. Hedge funds’ top 3 stock picks returned 41.7% this year and beat the S&P 500 ETFs by 14 percentage points. Investing in index funds guarantees you average returns, not superior returns. We are looking to generate superior returns for our readers. That’s why we believe it isn’t a waste of time to check out hedge fund sentiment before you invest in a stock like Ardagh Group S.A. (NYSE:ARD).

Is Ardagh Group S.A. (NYSE:ARD) a buy here? Hedge funds are becoming more confident. The number of long hedge fund positions advanced by 1 recently. Our calculations also showed that ARD isn’t among the 30 most popular stocks among hedge funds (click for Q3 rankings and see the video below for Q2 rankings).
5 Most Popular Stocks Among Hedge Funds
Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.

In the financial world there are several gauges stock traders put to use to assess their holdings. A pair of the less known gauges are hedge fund and insider trading interest. Our experts have shown that, historically, those who follow the best picks of the best money managers can outperform the S&P 500 by a significant amount (see the details here).


Ken Griffin of Citadel Investment Group

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. One of the most bullish analysts in America just put his money where his mouth is. He says, “I’m investing more today than I did back in early 2009.” So we check out his pitch. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. We also rely on the best performing hedge funds‘ buy/sell signals. Let’s check out the key hedge fund action regarding Ardagh Group S.A. (NYSE:ARD).

What have hedge funds been doing with Ardagh Group S.A. (NYSE:ARD)?

At Q3’s end, a total of 12 of the hedge funds tracked by Insider Monkey were long this stock, a change of 9% from the previous quarter. By comparison, 8 hedge funds held shares or bullish call options in ARD a year ago. So, let’s find out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

More specifically, Canyon Capital Advisors was the largest shareholder of Ardagh Group S.A. (NYSE:ARD), with a stake worth $45.6 million reported as of the end of September. Trailing Canyon Capital Advisors was Renaissance Technologies, which amassed a stake valued at $12.5 million. Whitebox Advisors, Millennium Management, and Citadel Investment Group 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 Canyon Capital Advisors allocated the biggest weight to Ardagh Group S.A. (NYSE:ARD), around 0.98% of its 13F portfolio. Whitebox Advisors is also relatively very bullish on the stock, dishing out 0.06 percent of its 13F equity portfolio to ARD.

Consequently, key money managers have jumped into Ardagh Group S.A. (NYSE:ARD) headfirst. ExodusPoint Capital, managed by Michael Gelband, initiated the most valuable position in Ardagh Group S.A. (NYSE:ARD). ExodusPoint Capital had $0.3 million invested in the company at the end of the quarter. Mario Gabelli’s GAMCO Investors also made a $0.2 million investment in the stock during the quarter. The only other fund with a brand new ARD position is Paul Marshall and Ian Wace’s Marshall Wace.

Let’s also examine hedge fund activity in other stocks similar to Ardagh Group S.A. (NYSE:ARD). These stocks are Apple Hospitality REIT Inc (NYSE:APLE), Equitrans Midstream Corporation (NYSE:ETRN), Tech Data Corporation (NASDAQ:TECD), and UniFirst Corporation (NYSE:UNF). This group of stocks’ market caps match ARD’s market cap.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
APLE 12 106485 -2
ETRN 16 334604 0
TECD 21 450204 3
UNF 23 195066 0
Average 18 271590 0.25

View table here if you experience formatting issues.

As you can see these stocks had an average of 18 hedge funds with bullish positions and the average amount invested in these stocks was $272 million. That figure was $64 million in ARD’s case. UniFirst Corp (NYSE:UNF) is the most popular stock in this table. On the other hand Apple Hospitality REIT Inc (NYSE:APLE) is the least popular one with only 12 bullish hedge fund positions. Compared to these stocks Ardagh Group S.A. (NYSE:ARD) is even less popular than APLE. Hedge funds clearly dropped the ball on ARD as the stock delivered strong returns, though hedge funds’ consensus picks still generated respectable returns. Our calculations showed that top 20 most popular stocks among hedge funds returned 37.4% in 2019 through the end of November and outperformed the S&P 500 ETF (SPY) by 9.9 percentage points. A small number of hedge funds were also right about betting on ARD as the stock returned 19.4% during the fourth quarter (through the end of November) and outperformed the market by an even larger margin.

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