Is PTVE A Good Stock To Buy Now?

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. We at Insider Monkey have plowed through 817 13F filings that hedge funds and well-known value investors are required to file by the SEC. The 13F filings show the funds’ and investors’ portfolio positions as of September 30th, about a month before the elections. In this article we look at what those investors think of Pactiv Evergreen Inc. (NASDAQ:PTVE).

Is PTVE a good stock to buy now? Prominent investors were becoming more confident. The number of bullish hedge fund positions advanced by 15 recently. Pactiv Evergreen Inc. (NASDAQ:PTVE) was in 15 hedge funds’ portfolios at the end of September. Our calculations also showed that PTVE 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 has shown that hedge funds’ small-cap stock picks managed to beat the market by double digits annually between 1999 and 2016, but the margin of outperformance has been declining in recent years. Nevertheless, we were still able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by 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 underperformed the market by 10 percentage points annually between 2006 and 2017. Interestingly the margin of underperformance of these stocks has been increasing in recent years. Investors who are long the market and short these stocks would have returned more than 27% annually between 2015 and 2017. We have been tracking and sharing the list of these stocks since February 2017 in our quarterly newsletter.


Dan Loeb of Third Point

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 take a look at the key hedge fund action encompassing Pactiv Evergreen Inc. (NASDAQ:PTVE).

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

At the end of the third quarter, a total of 15 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 15 from the previous quarter. The graph below displays the number of hedge funds with bullish position in PTVE 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, Rubric Capital Management held the most valuable stake in Pactiv Evergreen Inc. (NASDAQ:PTVE), which was worth $15.3 million at the end of the third quarter. On the second spot was Alyeska Investment Group which amassed $8.5 million worth of shares. Third Point, Point72 Asset Management, and HBK Investments 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 Pinz Capital allocated the biggest weight to Pactiv Evergreen Inc. (NASDAQ:PTVE), around 1.62% of its 13F portfolio. Rubric Capital Management is also relatively very bullish on the stock, earmarking 1.42 percent of its 13F equity portfolio to PTVE.

As industrywide interest jumped, some big names have been driving this bullishness. Rubric Capital Management, managed by David Rosen, initiated the most outsized position in Pactiv Evergreen Inc. (NASDAQ:PTVE). Rubric Capital Management had $15.3 million invested in the company at the end of the quarter. Anand Parekh’s Alyeska Investment Group also initiated a $8.5 million position during the quarter. The other funds with brand new PTVE positions are Dan Loeb’s Third Point, Steve Cohen’s Point72 Asset Management, and David Costen Haley’s HBK Investments.

Let’s also examine hedge fund activity in other stocks – not necessarily in the same industry as Pactiv Evergreen Inc. (NASDAQ:PTVE) but similarly valued. These stocks are Xencor Inc (NASDAQ:XNCR), Shenandoah Telecommunications Company (NASDAQ:SHEN), Golub Capital BDC Inc (NASDAQ:GBDC), Glaukos Corporation (NYSE:GKOS), WESCO International, Inc. (NYSE:WCC), LivaNova PLC (NASDAQ:LIVN), and Atlas Corp. (NYSE:ATCO). This group of stocks’ market values resemble PTVE’s market value.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
XNCR 18 301062 -1
SHEN 9 85112 1
GBDC 11 33376 -5
GKOS 15 126038 -3
WCC 29 612264 -5
LIVN 26 290777 -3
ATCO 10 922622 -2
Average 16.9 338750 -2.6

View table here if you experience formatting issues.

As you can see these stocks had an average of 16.9 hedge funds with bullish positions and the average amount invested in these stocks was $339 million. That figure was $55 million in PTVE’s case. WESCO International, Inc. (NYSE:WCC) is the most popular stock in this table. On the other hand Shenandoah Telecommunications Company (NASDAQ:SHEN) is the least popular one with only 9 bullish hedge fund positions. Pactiv Evergreen Inc. (NASDAQ:PTVE) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for PTVE is 34. 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 30.7% in 2020 through December 14th and still beat the market by 15.8 percentage points. A small number of hedge funds were also right about betting on PTVE as the stock returned 44% since the end of the third quarter (through 12/14) and outperformed the market by an even larger margin.

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