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Hedge Funds Done Selling Oracle Corporation (ORCL)?

The latest 13F reporting period has come and gone, and Insider Monkey have plowed through 823 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 June 30th, when the S&P 500 Index was trading around the 3100 level. Since the end of March, investors decided to bet on the economic recovery and a stock market rebound. S&P 500 Index returned more than 50% since its bottom. In this article you are going to find out whether hedge funds thought Oracle Corporation (NYSE:ORCL) was a good investment heading into the third quarter and how the stock traded in comparison to the top hedge fund picks.

Oracle Corporation (NYSE:ORCL) was in 49 hedge funds’ portfolios at the end of June. The all time high for this statistics is 39. This means the bullish number of hedge fund positions in this stock currently sits at its all time high. ORCL has experienced an increase in support from the world’s most elite money managers of late. There were 48 hedge funds in our database with ORCL positions at the end of the first quarter. Our calculations also showed that ORCL 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.

In the financial world there are a large number of tools investors have at their disposal to grade stocks. A pair of the most under-the-radar tools are hedge fund and insider trading indicators. We have shown that, historically, those who follow the top picks of the best fund managers can outperform the broader indices by a solid amount. Insider Monkey’s monthly stock picks returned 101% since March 2017 and outperformed the S&P 500 ETFs by more than 56 percentage points. Our short strategy outperformed the S&P 500 short ETFs by 20 percentage points annually (see the details here). That’s why we believe hedge fund sentiment is a useful indicator that investors should pay attention to.

Bruce Kovner, Caxton Associates LP

Bruce Kovner of Caxton Associates LP

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 gander at the key hedge fund action encompassing Oracle Corporation (NYSE:ORCL).

What have hedge funds been doing with Oracle Corporation (NYSE:ORCL)?

At second quarter’s end, a total of 49 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 2% from the first quarter of 2020. Below, you can check out the change in hedge fund sentiment towards ORCL over the last 20 quarters. So, let’s find out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

When looking at the institutional investors followed by Insider Monkey, Fisher Asset Management, managed by Ken Fisher, holds the biggest position in Oracle Corporation (NYSE:ORCL). Fisher Asset Management has a $721.9 million position in the stock, comprising 0.7% of its 13F portfolio. Coming in second is Cliff Asness of AQR Capital Management, with a $310.9 million position; the fund has 0.5% of its 13F portfolio invested in the stock. Remaining hedge funds and institutional investors with similar optimism include Richard S. Pzena’s Pzena Investment Management, D. E. Shaw’s D E Shaw and Peter Rathjens, Bruce Clarke and John Campbell’s Arrowstreet Capital. In terms of the portfolio weights assigned to each position Mondrian Capital allocated the biggest weight to Oracle Corporation (NYSE:ORCL), around 5.7% of its 13F portfolio. International Value Advisers is also relatively very bullish on the stock, earmarking 4.18 percent of its 13F equity portfolio to ORCL.

As aggregate interest increased, some big names have jumped into Oracle Corporation (NYSE:ORCL) headfirst. Point72 Asset Management, managed by Steve Cohen, initiated the biggest position in Oracle Corporation (NYSE:ORCL). Point72 Asset Management had $128.1 million invested in the company at the end of the quarter. Renaissance Technologies also initiated a $52.2 million position during the quarter. The other funds with brand new ORCL positions are Tor Minesuk’s Mondrian Capital, Matthew Hulsizer’s PEAK6 Capital Management, and Bruce Kovner’s Caxton Associates LP.

Let’s now take a look at hedge fund activity in other stocks – not necessarily in the same industry as Oracle Corporation (NYSE:ORCL) but similarly valued. We will take a look at salesforce.com, inc. (NYSE:CRM), SAP SE (NYSE:SAP), Chevron Corporation (NYSE:CVX), Abbott Laboratories (NYSE:ABT), Eli Lilly and Company (NYSE:LLY), ASML Holding N.V. (NASDAQ:ASML), and Novo Nordisk A/S (NYSE:NVO). This group of stocks’ market values are closest to ORCL’s market value.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
CRM 107 9769139 -10
SAP 16 1253641 1
CVX 50 1585417 -3
ABT 67 3504346 5
LLY 51 2161323 8
ASML 25 1961320 -5
NVO 24 3294368 0
Average 48.6 3361365 -0.6

View table here if you experience formatting issues.

As you can see these stocks had an average of 48.6 hedge funds with bullish positions and the average amount invested in these stocks was $3361 million. That figure was $2312 million in ORCL’s case. salesforce.com, inc. (NYSE:CRM) is the most popular stock in this table. On the other hand SAP SE (NYSE:SAP) is the least popular one with only 16 bullish hedge fund positions. Oracle Corporation (NYSE:ORCL) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for ORCL is 54.1. 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 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 beat the market by 23.2 percentage points. Unfortunately ORCL wasn’t nearly as popular as these 10 stocks and hedge funds that were betting on ORCL were disappointed as the stock returned 4% during the same time period and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 10 most popular stocks among hedge funds as many of these stocks already outperformed the market so far this year.

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