Hedge funds and large money managers usually invest with a focus on the long-term horizon and, therefore, short-lived dips on the charts, usually don’t make them change their opinion towards a company. The second half of 2015 and the first few months of this year was a stressful period for hedge funds. However, things have been taking a turn for the better in the second half of this year. Small-cap stocks which hedge funds are usually overweight outperformed the market by double digits and it may be a good time to pay attention to hedge funds’ picks before it is too late. In this article we are going to analyze the hedge fund sentiment towards Bemis Company, Inc. (NYSE:BMS).
Is Bemis Company, Inc. (NYSE:BMS) a buy here? Hedge funds seem to be in a pessimistic mood. During the third quarter, the number of investors tracked by Insider Monkey long BMS fell by two to 16. At the end of this article we will also compare BMS to other stocks including AECOM Technology Corp (NYSE:ACM), The Toro Company (NYSE:TTC), and AutoNation, Inc. (NYSE:AN) to get a better sense of its popularity.
At Insider Monkey, we’ve developed an investment strategy that has delivered market-beating returns over the past 12 months. Our strategy identifies the 100 best-performing funds of the previous quarter from among the collection of 700+ successful funds that we track in our database, which we accomplish using our returns methodology. We then study the portfolios of those 100 funds using the latest 13F data to uncover the 30 most popular mid-cap stocks (market caps of between $1 billion and $10 billion) among them to hold until the next filing period. This strategy delivered 18% gains over the past 12 months, more than doubling the 8% returns enjoyed by the S&P 500 ETFs.
What does the smart money think about Bemis Company, Inc. (NYSE:BMS)?
Heading into the fourth quarter of 2016, 16 funds from the Insider Monkey database were long Bemis Company, down by 11% from the end of the second quarter. The graph below displays the number of hedge funds with bullish position in BMS over the last five quarters. With hedgies’ positions undergoing their usual ebb and flow, there exists an “upper tier” of notable hedge fund managers who were boosting their stakes meaningfully (or already accumulated large positions).
According to Insider Monkey’s hedge fund database, Cliff Asness’ AQR Capital Management is the top shareholder of Bemis Company, Inc. (NYSE:BMS), holding a $59.3 million position in the stock. Coming in second is Steve Cohen’s Point72 Asset Management, which holds a $45.5 million position. Remaining peers that are bullish include Chuck Royce’s Royce & Associates, Jim Simons’ Renaissance Technologies, and D. E. Shaw’s D E Shaw. We should note that none of these hedge funds are among our list of the 100 best performing hedge funds, which is based on the performance of their 13F long positions in non-microcap stocks.
Seeing as Bemis Company, Inc. (NYSE:BMS) has sustained falling interest from hedge fund managers, we can see that there was a specific group of hedgies that elected to cut their positions entirely in the third quarter. It’s worth mentioning that Israel Englander’s Millennium Management cashed in the biggest stake of all the hedgies followed by Insider Monkey, totaling an estimated $21.5 million in stock. Principal Global Investors’s fund, Columbus Circle Investors, also cut its stock, about $8 million worth.
Let’s check out hedge fund activity in other stocks similar to Bemis Company, Inc. (NYSE:BMS). We will take a look at AECOM Technology Corp (NYSE:ACM), The Toro Company (NYSE:TTC), AutoNation, Inc. (NYSE:AN), and Acadia Healthcare Company Inc (NASDAQ:ACHC). All of these stocks’ market caps match BMS’s market cap.
|Ticker||No of HFs with positions||Total Value of HF Positions (x1000)||Change in HF Position|
As you can see these stocks had an average of 24 hedge funds with bullish positions and the average amount invested in these stocks was $556 million, compared to $166 million in BMS’s case. AECOM Technology Corp (NYSE:ACM) is the most popular stock in this table. On the other hand Acadia Healthcare Company Inc (NASDAQ:ACHC) is the least popular one with only 22 bullish hedge fund positions. Compared to these stocks Bemis Company, Inc. (NYSE:BMS) is even less popular than Acadia Healthcare Company Inc (NASDAQ:ACHC). Considering that hedge funds aren’t fond of this stock in relation to other companies analyzed in this article, it may be a good idea to analyze it in detail and understand why the smart money isn’t behind this stock. This isn’t necessarily bad news. Although it is possible that hedge funds may think the stock is overpriced and view the stock as a short candidate, they may not be very familiar with the bullish thesis. In either case more research is warranted.