We know that hedge funds generate strong, risk-adjusted returns over the long run, which is why imitating the picks that they are collectively bullish on can be a profitable strategy for retail investors. With billions of dollars in assets, professional investors have to conduct complex analyses, spend many resources and use tools that are not always available for the general crowd. This doesn't mean that they don't have occasional colossal losses; they do. However, it is still a good idea to keep an eye on hedge fund activity. With this in mind, let’s examine the smart money sentiment towards Crown Holdings, Inc. (NYSE:CCK) and determine whether hedge funds skillfully traded this stock.
Crown Holdings, Inc. (NYSE:CCK) has experienced a decrease in activity from the world's largest hedge funds of late. Crown Holdings, Inc. (NYSE:CCK) was in 51 hedge funds' portfolios at the end of June. Our calculations also showed that CCK isn't among the 30 most popular stocks among hedge funds (click for Q2 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.
To the average investor there are tons of methods investors have at their disposal to size up stocks. A pair of the best methods are hedge fund and insider trading moves. We have shown that, historically, those who follow the best picks of the elite investment managers can outclass the market by a significant margin (see the details here).
Alex Litowitz Magnetar Capital
Alex Litowitz of Magnetar Capital
At Insider Monkey we scour multiple sources to uncover the next great investment idea. 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 precious metals prices. So, we are checking out this junior gold mining stock.. We go through lists like the 10 most profitable companies in America 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. If you want to find out the best healthcare stock to buy right now, you can watch our latest hedge fund manager interview here. With all of this in mind let's take a peek at the new hedge fund action surrounding Crown Holdings, Inc. (NYSE:CCK).
What does smart money think about Crown Holdings, Inc. (NYSE:CCK)?
At the end of the second quarter, a total of 51 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -9% from the previous quarter. On the other hand, there were a total of 35 hedge funds with a bullish position in CCK a year ago. With hedge funds' capital changing hands, there exists an "upper tier" of notable hedge fund managers who were adding to their holdings significantly (or already accumulated large positions).
More specifically, Lyrical Asset Management was the largest shareholder of Crown Holdings, Inc. (NYSE:CCK), with a stake worth $225.9 million reported as of the end of September. Trailing Lyrical Asset Management was Maverick Capital, which amassed a stake valued at $148.7 million. Southpoint Capital Advisors, Rivulet Capital, and Adage Capital 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 SAYA Management allocated the biggest weight to Crown Holdings, Inc. (NYSE:CCK), around 14.83% of its 13F portfolio. Impactive Capital is also relatively very bullish on the stock, dishing out 11.54 percent of its 13F equity portfolio to CCK.
Since Crown Holdings, Inc. (NYSE:CCK) has witnessed bearish sentiment from the aggregate hedge fund industry, it's safe to say that there exists a select few fund managers who sold off their positions entirely last quarter. Interestingly, Anand Parekh's Alyeska Investment Group said goodbye to the largest position of all the hedgies monitored by Insider Monkey, worth an estimated $42.2 million in stock, and Guy Shahar's DSAM Partners was right behind this move, as the fund cut about $34.7 million worth. These transactions are intriguing to say the least, as aggregate hedge fund interest was cut by 5 funds last quarter.
Let's also examine hedge fund activity in other stocks similar to Crown Holdings, Inc. (NYSE:CCK). These stocks are Fastly, Inc. (NYSE:FSLY), Cna Financial Corporation (NYSE:CNA), NiSource Inc. (NYSE:NI), Equitable Holdings, Inc. (NYSE:EQH), RenaissanceRe Holdings Ltd. (NYSE:RNR), Clarivate Plc (NYSE:CCC), and Charles River Laboratories International Inc. (NYSE:CRL). This group of stocks' market caps are similar to CCK's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position FSLY,27,1662391,5 CNA,12,48476,0 NI,21,300585,-6 EQH,39,1111581,12 RNR,41,870861,11 CCC,45,1300868,17 CRL,41,1050760,5 Average,32.3,906503,6.3 [/table]
As you can see these stocks had an average of 32.3 hedge funds with bullish positions and the average amount invested in these stocks was $907 million. That figure was $1240 million in CCK's case. Clarivate Plc (NYSE:CCC) is the most popular stock in this table. On the other hand Cna Financial Corporation (NYSE:CNA) is the least popular one with only 12 bullish hedge fund positions. Compared to these stocks Crown Holdings, Inc. (NYSE:CCK) is more popular among hedge funds. Our overall hedge fund sentiment score for CCK is 76.8. 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 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 gained 33% in 2020 through the end of August and still managed to beat the market by 23.2 percentage points. Hedge funds were also right about betting on CCK, though not to the same extent, as the stock returned 18% since the end of June and outperformed the market as well.
