Is GPK A Good Stock To Buy According To Hedge Funds?

The latest 13F reporting period has come and gone, and Insider Monkey is again at the forefront when it comes to making use of this gold mine of data. Insider Monkey finished processing 817 13F filings submitted by hedge funds and prominent investors. These filings show these funds’ portfolio positions as of September 30th, 2020. In this article we are going to take a look at smart money sentiment towards Graphic Packaging Holding Company (NYSE:GPK).

Is GPK a good stock to buy? Graphic Packaging Holding Company (NYSE:GPK) was in 30 hedge funds’ portfolios at the end of the third quarter of 2020. The all time high for this statistic is 44. GPK has seen a decrease in support from the world’s most elite money managers lately. There were 32 hedge funds in our database with GPK positions at the end of the second quarter. Our calculations also showed that GPK 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.

According to most traders, hedge funds are seen as worthless, outdated investment vehicles of years past. While there are greater than 8000 funds with their doors open at present, Our researchers look at the crème de la crème of this group, about 850 funds. These investment experts preside over most of the smart money’s total capital, and by keeping an eye on their finest equity investments, Insider Monkey has unearthed many investment strategies that have historically outpaced Mr. Market. Insider Monkey’s flagship short hedge fund strategy outpaced the S&P 500 short ETFs by around 20 percentage points per year since its inception in March 2017. Our portfolio of short stocks lost 13% since February 2017 (through November 17th) even though the market was up 65% during the same period. We just shared a list of 6 short targets in our latest quarterly update .

Ricky Sandler of Eminence Capital

At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, the House passed a landmark bill decriminalizing marijuana. So, we are checking out this under the radar cannabis stock right now. We go through lists like the 15 best blue chip stocks to buy 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. With all of this in mind we’re going to review the recent hedge fund action encompassing Graphic Packaging Holding Company (NYSE:GPK).

Do Hedge Funds Think GPK Is A Good Stock To Buy Now?

At the end of the third quarter, a total of 30 of the hedge funds tracked by Insider Monkey were long this stock, a change of -6% from the second quarter of 2020. By comparison, 36 hedge funds held shares or bullish call options in GPK a year ago. 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, D E Shaw held the most valuable stake in Graphic Packaging Holding Company (NYSE:GPK), which was worth $60.5 million at the end of the third quarter. On the second spot was Eminence Capital which amassed $51.6 million worth of shares. Millennium Management, Marshall Wace LLP, and 12th Street 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 12th Street Asset Management allocated the biggest weight to Graphic Packaging Holding Company (NYSE:GPK), around 6.04% of its 13F portfolio. Eminence Capital is also relatively very bullish on the stock, earmarking 0.51 percent of its 13F equity portfolio to GPK.

Seeing as Graphic Packaging Holding Company (NYSE:GPK) has witnessed a decline in interest from the aggregate hedge fund industry, we can see that there is a sect of funds that decided to sell off their full holdings in the third quarter. It’s worth mentioning that Michael Cowley’s Sandbar Asset Management dumped the largest stake of the 750 funds watched by Insider Monkey, comprising close to $5.5 million in stock. David Harding’s fund, Winton Capital Management, also sold off its stock, about $3.1 million worth. These transactions are important to note, as aggregate hedge fund interest was cut by 2 funds in the third quarter.

Let’s also examine hedge fund activity in other stocks similar to Graphic Packaging Holding Company (NYSE:GPK). We will take a look at NovaGold Resources Inc. (NYSE:NG), Lattice Semiconductor Corporation (NASDAQ:LSCC), TFI International Inc. (NYSE:TFII), Gildan Activewear Inc (NYSE:GIL), CAE, Inc. (NYSE:CAE), Biohaven Pharmaceutical Holding Company Ltd. (NYSE:BHVN), and FTI Consulting, Inc. (NYSE:FCN). This group of stocks’ market valuations match GPK’s market valuation.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
NG 19 466079 -4
LSCC 24 135268 5
TFII 13 116787 3
GIL 18 522441 -4
CAE 12 88171 -2
BHVN 33 751815 -9
FCN 37 388149 5
Average 22.3 352673 -0.9

View table here if you experience formatting issues.

As you can see these stocks had an average of 22.3 hedge funds with bullish positions and the average amount invested in these stocks was $353 million. That figure was $312 million in GPK’s case. FTI Consulting, Inc. (NYSE:FCN) is the most popular stock in this table. On the other hand CAE, Inc. (NYSE:CAE) is the least popular one with only 12 bullish hedge fund positions. Graphic Packaging Holding Company (NYSE:GPK) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for GPK is 59.5. 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. 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 33.3% in 2020 through December 18th and still beat the market by 16.4 percentage points. Hedge funds were also right about betting on GPK as the stock returned 18.3% since the end of Q3 (through 12/18) and outperformed the market. Hedge funds were rewarded for their relative bullishness.

Follow Graphic Packaging Holding Co (NYSE:GPK)

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