Hedge Funds Are Nibbling On Oracle Corporation (ORCL)

Coronavirus is probably the #1 concern in investors’ minds right now. It should be. On February 27th we publish an article with the title “Recession is Imminent: We Need A Travel Ban NOW”. We predicted that a US recession is imminent and US stocks will go down by at least 20% in the next 3-6 months. We also told you to short the market ETFs and buy long-term bonds. Investors who agreed with us and replicated these trades are up double digits whereas the market is down double digits. Our article also called for a total international travel ban to prevent the spread of the coronavirus especially from Europe. We were one step ahead of the markets and the president.

In these volatile markets we scrutinize hedge fund filings to get a reading on which direction each stock might be going. Before we spend countless hours researching a company, we like to analyze what insiders, hedge funds and billionaire investors think of the stock first. This is a necessary first step in our investment process because our research has shown that the elite investors’ consensus returns have been exceptional. In the following paragraphs, we find out what the billionaire investors and hedge funds think of Oracle Corporation (NASDAQ:ORCL).

Is Oracle Corporation (NASDAQ:ORCL) the right pick for your portfolio? Prominent investors are getting more bullish. The number of bullish hedge fund positions rose by 3 in recent months. Our calculations also showed that ORCL isn’t among the 30 most popular stocks among hedge funds (click for Q4 rankings and see the video below for Q3 rankings). ORCL was in 59 hedge funds’ portfolios at the end of December. There were 56 hedge funds in our database with ORCL holdings at the end of the previous quarter.
5 Most Popular Stocks Among Hedge Funds
Video: Click the image to 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 was able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by more than 41 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’ll significantly underperform the market. We have been tracking and sharing the list of these stocks since February 2017 and they lost 35.3% through March 3rd. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.


Ken Fisher of Fisher Asset Management

We leave no stone unturned when looking for the next great investment idea. For example Europe is set to become the world’s largest cannabis market, so we check out this European marijuana stock pitch. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences, and and go through short-term trade recommendations like this one. We even check out the recommendations of services with hard to believe track records. In January, we recommended a long position in one of the most shorted stocks in the market, and that stock returned more than 50% despite the large losses in the market since our recommendation. With all of this in mind let’s check out the fresh hedge fund action encompassing Oracle Corporation (NASDAQ:ORCL).

How are hedge funds trading Oracle Corporation (NASDAQ:ORCL)?

At the end of the fourth quarter, a total of 59 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 5% from the previous quarter. Below, you can check out the change in hedge fund sentiment towards ORCL over the last 18 quarters. So, let’s check out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

Is ORCL A Good Stock To Buy?

Of the funds tracked by Insider Monkey, Ken Fisher’s Fisher Asset Management has the number one position in Oracle Corporation (NASDAQ:ORCL), worth close to $845.8 million, comprising 0.9% of its total 13F portfolio. Coming in second is Boykin Curry of Eagle Capital Management, with a $823.8 million position; 2.6% of its 13F portfolio is allocated to the stock. Remaining professional money managers with similar optimism encompass Cliff Asness’s AQR Capital Management, Donald Yacktman’s Yacktman Asset Management and Richard S. Pzena’s Pzena Investment Management. In terms of the portfolio weights assigned to each position Yacktman Asset Management allocated the biggest weight to Oracle Corporation (NASDAQ:ORCL), around 5.05% of its 13F portfolio. BloombergSen is also relatively very bullish on the stock, dishing out 3.92 percent of its 13F equity portfolio to ORCL.

With a general bullishness amongst the heavyweights, key money managers were breaking ground themselves. Renaissance Technologies, initiated the most outsized position in Oracle Corporation (NASDAQ:ORCL). Renaissance Technologies had $46 million invested in the company at the end of the quarter. Ben Levine, Andrew Manuel and Stefan Renold’s LMR Partners also initiated a $5.9 million position during the quarter. The other funds with brand new ORCL positions are Ali Motamed’s Invenomic Capital Management, Matthew Tewksbury’s Stevens Capital Management, and Nathan Przybylo’s L2 Asset Management.

Let’s check out hedge fund activity in other stocks – not necessarily in the same industry as Oracle Corporation (NASDAQ:ORCL) but similarly valued. We will take a look at SAP AG (NYSE:SAP), Anheuser-Busch InBev SA/NV (NYSE:BUD), Adobe Inc. (NASDAQ:ADBE), and HSBC Holdings plc (NYSE:HSBC). All of these stocks’ market caps match ORCL’s market cap.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
SAP 16 1763846 -4
BUD 23 1478846 2
ADBE 106 9784116 4
HSBC 18 1118976 2
Average 40.75 3536446 1

View table here if you experience formatting issues.

As you can see these stocks had an average of 40.75 hedge funds with bullish positions and the average amount invested in these stocks was $3536 million. That figure was $3720 million in ORCL’s case. Adobe Inc. (NASDAQ:ADBE) is the most popular stock in this table. On the other hand SAP AG (NYSE:SAP) is the least popular one with only 16 bullish hedge fund positions. Oracle Corporation (NASDAQ:ORCL) is not the most popular stock in this group but hedge fund interest is still above average. 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 10.1 percentage points. These stocks lost 12.9% in 2020 through March 9th but still beat the market by 1.9 percentage points. Hedge funds were also right about betting on ORCL as the stock returned -12.8% during the first quarter (through March 9th) and outperformed the market. Hedge funds were rewarded for their relative bullishness.

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