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Rock-Tenn Company (RKT): Hedge Funds Are Bullish and Insiders Are Bearish, What Should You Do?

Rock-Tenn Company (NYSE:RKT) was in 33 hedge funds’ portfolio at the end of March. RKT has experienced an increase in hedge fund sentiment of late. There were 28 hedge funds in our database with RKT holdings at the end of the previous quarter.

Rock-Tenn Company (NYSE:RKT)

In today’s marketplace, there are dozens of gauges investors can use to analyze publicly traded companies. Some of the most underrated are hedge fund and insider trading activity. At Insider Monkey, our studies have shown that, historically, those who follow the best picks of the top hedge fund managers can outperform the market by a very impressive amount (see just how much).

Just as integral, bullish insider trading sentiment is a second way to break down the stock market universe. As the old adage goes: there are lots of motivations for an executive to cut shares of his or her company, but only one, very simple reason why they would behave bullishly. Various academic studies have demonstrated the valuable potential of this method if “monkeys” know what to do (learn more here).

With all of this in mind, let’s take a glance at the latest action encompassing Rock-Tenn Company (NYSE:RKT).

How are hedge funds trading Rock-Tenn Company (NYSE:RKT)?

Heading into Q2, a total of 33 of the hedge funds we track were bullish in this stock, a change of 18% from the first quarter. With hedge funds’ sentiment swirling, there exists a few notable hedge fund managers who were upping their holdings significantly.

When looking at the hedgies we track, John Paulson’s Paulson & Co had the most valuable position in Rock-Tenn Company (NYSE:RKT), worth close to $129.9 million, accounting for 0.7% of its total 13F portfolio. On Paulson & Co’s heels is Capital Growth Management, managed by Ken Heebner, which held a $120.4 million position; the fund has 3% of its 13F portfolio invested in the stock. Remaining peers that are bullish include Thomas E. Claugus’s GMT Capital, Eric Bannasch’s Cadian Capital and John Burbank’s Passport Capital.

As industrywide interest jumped, key money managers were breaking ground themselves. Sandler Capital Management, managed by Andrew Sandler, created the most outsized position in Rock-Tenn Company (NYSE:RKT). Sandler Capital Management had 11.4 million invested in the company at the end of the quarter. Glenn J. Krevlin’s Glenhill Advisors also made a $8.4 million investment in the stock during the quarter. The other funds with new positions in the stock are SAC Subsidiary’s CR Intrinsic Investors, Richard Driehaus’s Driehaus Capital, and D. E. Shaw’s D E Shaw.

What do corporate executives and insiders think about Rock-Tenn Company (NYSE:RKT)?

Bullish insider trading is at its handiest when the company we’re looking at has seen transactions within the past half-year. Over the latest six-month time period, Rock-Tenn Company (NYSE:RKT) has experienced zero unique insiders purchasing, and 7 insider sales (see the details of insider trades here).

Let’s go over hedge fund and insider activity in other stocks similar to Rock-Tenn Company (NYSE:RKT). These stocks are Tupperware Brands Corporation (NYSE:TUP), Sealed Air Corp (NYSE:SEE), Crown Holdings, Inc. (NYSE:CCK), Ball Corporation (NYSE:BLL), and MeadWestvaco Corp. (NYSE:MWV). This group of stocks belong to the packaging & containers industry and their market caps resemble RKT’s market cap.