Hedge Funds Are Dumping Markel Corporation (MKL)

Hedge Funds and other institutional investors have just completed filing their 13Fs with the Securities and Exchange Commission, revealing their equity portfolios as of the end of September. At Insider Monkey, we follow nearly 900 active hedge funds and notable investors and by analyzing their 13F filings, we can determine the stocks that they are collectively bullish on. One of their picks is Markel Corporation (NYSE:MKL), so let’s take a closer look at the sentiment that surrounds it in the current quarter.

Is Markel Corporation (NYSE:MKL) going to take off soon? Prominent investors were reducing their bets on the stock. The number of bullish hedge fund positions retreated by 6 recently. Markel Corporation (NYSE:MKL) was in 30 hedge funds’ portfolios at the end of March. The all time high for this statistic is 37. Our calculations also showed that MKL isn’t among the 30 most popular stocks among hedge funds (click for Q1 rankings).

To most investors, hedge funds are perceived as worthless, old financial vehicles of yesteryear. While there are over 8000 funds in operation at the moment, Our researchers hone in on the bigwigs of this club, approximately 850 funds. These money managers command bulk of the hedge fund industry’s total capital, and by following their first-class equity investments, Insider Monkey has identified several investment strategies that have historically outstripped Mr. Market. Insider Monkey’s flagship short hedge fund strategy outstripped the S&P 500 short ETFs by around 20 percentage points per year since its inception in March 2017. Also, our monthly newsletter’s portfolio of long stock picks returned 206.8% since March 2017 (through May 2021) and beat the S&P 500 Index by more than 115 percentage points. You can download a sample issue of this newsletter on our website .

Millennium Management, Catapult Capital Management

Israel Englander of Millennium Management

At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, lithium mining is one of the fastest growing industries right now, so we are checking out stock pitches like this emerging lithium stock. We go through lists like the 10 best EV stocks to pick the next Tesla that will deliver a 10x return. 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 homepage. With all of this in mind let’s review the fresh hedge fund action surrounding Markel Corporation (NYSE:MKL).

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

At the end of the first quarter, a total of 30 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -17% from the fourth quarter of 2020. The graph below displays the number of hedge funds with bullish position in MKL over the last 23 quarters. So, let’s see which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

Is MKL A Good Stock To Buy?

The largest stake in Markel Corporation (NYSE:MKL) was held by Polar Capital, which reported holding $143.4 million worth of stock at the end of December. It was followed by Giverny Capital with a $77.6 million position. Other investors bullish on the company included Wallace R. Weitz & Co., Millennium Management, and Select Equity Group. In terms of the portfolio weights assigned to each position Giverny Capital allocated the biggest weight to Markel Corporation (NYSE:MKL), around 5.19% of its 13F portfolio. Wallace R. Weitz & Co. is also relatively very bullish on the stock, designating 2.93 percent of its 13F equity portfolio to MKL.

Judging by the fact that Markel Corporation (NYSE:MKL) has experienced a decline in interest from hedge fund managers, logic holds that there were a few hedge funds that decided to sell off their full holdings last quarter. It’s worth mentioning that Paul Marshall and Ian Wace’s Marshall Wace LLP sold off the largest position of the “upper crust” of funds followed by Insider Monkey, worth an estimated $6.8 million in stock. Greg Eisner’s fund, Engineers Gate Manager, also sold off its stock, about $2.3 million worth. These moves are interesting, as total hedge fund interest dropped by 6 funds last quarter.

Let’s now take a look at hedge fund activity in other stocks – not necessarily in the same industry as Markel Corporation (NYSE:MKL) but similarly valued. We will take a look at Check Point Software Technologies Ltd. (NASDAQ:CHKP), Duke Realty Corporation (NYSE:DRE), Zendesk Inc (NYSE:ZEN), WPP Plc (NASDAQ:WPP), Grifols SA (NASDAQ:GRFS), Arch Capital Group Ltd. (NASDAQ:ACGL), and Avangrid, Inc. (NYSE:AGR). This group of stocks’ market caps resemble MKL’s market cap.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
CHKP 31 494577 5
DRE 20 279688 3
ZEN 45 1483992 -13
WPP 5 34389 -1
GRFS 12 321129 -5
ACGL 34 1671185 0
AGR 15 58976 5
Average 23.1 620562 -0.9

View table here if you experience formatting issues.

As you can see these stocks had an average of 23.1 hedge funds with bullish positions and the average amount invested in these stocks was $621 million. That figure was $654 million in MKL’s case. Zendesk Inc (NYSE:ZEN) is the most popular stock in this table. On the other hand WPP Plc (NASDAQ:WPP) is the least popular one with only 5 bullish hedge fund positions. Markel Corporation (NYSE:MKL) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for MKL is 54.6. 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. This is a slightly positive signal but we’d rather spend our time researching stocks that hedge funds are piling on. Our calculations showed that top 5 most popular stocks among hedge funds returned 95.8% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 40 percentage points. These stocks gained 22.8% in 2021 through July 2nd and beat the market again by 6 percentage points. Unfortunately MKL wasn’t nearly as popular as these 5 stocks and hedge funds that were betting on MKL were disappointed as the stock returned 7% since the end of March (through 7/2) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 5 most popular stocks among hedge funds as many of these stocks already outperformed the market since 2019.

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