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Is Berry Global Group Inc (BERY) A Good Stock To Buy?

Before we spend countless hours researching a company, we like to analyze what insiders, hedge funds and billionaire investors think of the stock first. This is a necessary first step in our investment process because our research has shown that the elite investors’ consensus returns have been exceptional. In the following paragraphs, we find out what the billionaire investors and hedge funds think of Berry Global Group Inc (NYSE:BERY).

Is Berry Global Group Inc (NYSE:BERY) going to take off soon? The smart money is becoming less hopeful. The number of long hedge fund positions were trimmed by 13 recently. Our calculations also showed that BERY 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 was able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by more than 51 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 36% through May 18th. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.

Ricky Sandler of Eminence Capital

At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, 2020’s unprecedented market conditions provide us with the highest number of trading opportunities in a decade. So we are checking out trades like this one. 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. Keeping this in mind we’re going to review the fresh hedge fund action regarding Berry Global Group Inc (NYSE:BERY).

What have hedge funds been doing with Berry Global Group Inc (NYSE:BERY)?

At the end of the first quarter, a total of 34 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -28% from the previous quarter. By comparison, 40 hedge funds held shares or bullish call options in BERY a year ago. With the smart money’s sentiment swirling, there exists a select group of noteworthy hedge fund managers who were increasing their holdings considerably (or already accumulated large positions).

Is BERY A Good Stock To Buy?

More specifically, Eminence Capital was the largest shareholder of Berry Global Group Inc (NYSE:BERY), with a stake worth $418.6 million reported as of the end of September. Trailing Eminence Capital was Canyon Capital Advisors, which amassed a stake valued at $338.4 million. Orbis Investment Management, Two Creeks Capital Management, and Lyrical Asset 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 SCW Capital Management allocated the biggest weight to Berry Global Group Inc (NYSE:BERY), around 16.72% of its 13F portfolio. Canyon Capital Advisors is also relatively very bullish on the stock, earmarking 11.95 percent of its 13F equity portfolio to BERY.

Due to the fact that Berry Global Group Inc (NYSE:BERY) has witnessed declining sentiment from the smart money, it’s easy to see that there was a specific group of hedgies who were dropping their full holdings in the third quarter. At the top of the heap, Steve Cohen’s Point72 Asset Management dumped the biggest stake of the 750 funds tracked by Insider Monkey, totaling an estimated $25.7 million in stock, and John Overdeck and David Siegel’s Two Sigma Advisors was right behind this move, as the fund cut about $11.6 million worth. These transactions are important to note, as total hedge fund interest dropped by 13 funds in the third quarter.

Let’s now take a look at hedge fund activity in other stocks similar to Berry Global Group Inc (NYSE:BERY). We will take a look at PLDT Inc. (NYSE:PHI), IDACORP Inc (NYSE:IDA), Store Capital Corporation (NYSE:STOR), and Stericycle Inc (NASDAQ:SRCL). All of these stocks’ market caps are similar to BERY’s market cap.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
PHI 7 74090 0
IDA 24 282100 0
STOR 25 443966 5
SRCL 20 571854 -4
Average 19 343003 0.25

View table here if you experience formatting issues.

As you can see these stocks had an average of 19 hedge funds with bullish positions and the average amount invested in these stocks was $343 million. That figure was $1207 million in BERY’s case. Store Capital Corporation (NYSE:STOR) is the most popular stock in this table. On the other hand PLDT Inc. (NYSE:PHI) is the least popular one with only 7 bullish hedge fund positions. Compared to these stocks Berry Global Group Inc (NYSE:BERY) is more popular among hedge funds. 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 returned 8.3% in 2020 through the end of May but still managed to beat the market by 13.2 percentage points. Hedge funds were also right about betting on BERY as the stock returned 33.2% so far in Q2 (through the end of May) and outperformed the market by an even larger margin. Hedge funds were clearly right about piling into this stock relative to other stocks with similar market capitalizations.

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