We hate to say this but, we told you so. On February 27th we published an article with the title Recession is Imminent: We Need A Travel Ban NOW and predicted a US recession when the S&P 500 Index was trading at the 3150 level. We also told you to short the market and buy long-term Treasury bonds. Our article also called for a total international travel ban. While we were warning you, President Trump minimized the threat and failed to act promptly. As a result of his inaction, we will now experience a deeper recession (see why hell is coming).
In these volatile markets we scrutinize hedge fund filings to get a reading on which direction each stock might be going. Our extensive research has shown that imitating the smart money can generate significant returns for retail investors, which is why we track nearly 835 active prominent money managers and analyze their quarterly 13F filings. The stocks that are heavily bought by hedge funds historically outperformed the market, though there is no shortage of high profile failures like hedge funds’ 2018 losses in Facebook and Apple. Let’s take a closer look at what the funds we track think about Murphy USA Inc. (NYSE:MUSA) in this article.
Murphy USA Inc. (NYSE:MUSA) investors should pay attention to an increase in activity from the world’s largest hedge funds recently. Our calculations also showed that MUSA isn’t among the 30 most popular stocks among hedge funds (click for Q4 rankings and see the video at the end of this article for Q3 rankings).
If you’d ask most stock holders, hedge funds are viewed as underperforming, old financial vehicles of years past. While there are greater than 8000 funds with their doors open today, Our experts look at the moguls of this group, around 850 funds. It is estimated that this group of investors orchestrate the majority of all hedge funds’ total capital, and by observing their best equity investments, Insider Monkey has figured out numerous investment strategies that have historically defeated the S&P 500 index. Insider Monkey’s flagship short hedge fund strategy exceeded the S&P 500 short ETFs by around 20 percentage points a year since its inception in March 2017. Our portfolio of short stocks lost 35.3% since February 2017 (through March 3rd) even though the market was up more than 35% during the same period. We just shared a list of 7 short targets in our latest quarterly update .
We leave no stone unturned when looking for the next great investment idea. For example we recently identified a stock that trades 25% below the net cash on its balance sheet. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences, and go through short-term trade recommendations like this one. We even check out the recommendations of services with hard to believe track records. Our best call in 2020 was shorting the market when S&P 500 was trading at 3150 after realizing the coronavirus pandemic’s significance before most investors. With all of this in mind we’re going to check out the recent hedge fund action encompassing Murphy USA Inc. (NYSE:MUSA).
How are hedge funds trading Murphy USA Inc. (NYSE:MUSA)?
At Q4’s end, a total of 28 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 27% from the previous quarter. Below, you can check out the change in hedge fund sentiment towards MUSA over the last 18 quarters. With hedge funds’ sentiment swirling, there exists a select group of notable hedge fund managers who were increasing their stakes considerably (or already accumulated large positions).
Of the funds tracked by Insider Monkey, AQR Capital Management, managed by Cliff Asness, holds the biggest position in Murphy USA Inc. (NYSE:MUSA). AQR Capital Management has a $93.1 million position in the stock, comprising 0.1% of its 13F portfolio. On AQR Capital Management’s heels is Arrowstreet Capital, managed by Peter Rathjens, Bruce Clarke and John Campbell, which holds a $79.2 million position; 0.2% of its 13F portfolio is allocated to the stock. Remaining members of the smart money with similar optimism encompass Renaissance Technologies, Noam Gottesman’s GLG Partners and David Harding’s Winton Capital Management. In terms of the portfolio weights assigned to each position Winton Capital Management allocated the biggest weight to Murphy USA Inc. (NYSE:MUSA), around 0.25% of its 13F portfolio. Sciencast Management is also relatively very bullish on the stock, designating 0.23 percent of its 13F equity portfolio to MUSA.
Now, some big names have jumped into Murphy USA Inc. (NYSE:MUSA) headfirst. Marshall Wace LLP, managed by Paul Marshall and Ian Wace, established the largest position in Murphy USA Inc. (NYSE:MUSA). Marshall Wace LLP had $3.6 million invested in the company at the end of the quarter. Ken Griffin’s Citadel Investment Group also made a $2.3 million investment in the stock during the quarter. The other funds with brand new MUSA positions are Dmitry Balyasny’s Balyasny Asset Management, Michael Kharitonov and Jon David McAuliffe’s Voleon Capital, and Richard Driehaus’s Driehaus Capital.
Let’s now take a look at hedge fund activity in other stocks – not necessarily in the same industry as Murphy USA Inc. (NYSE:MUSA) but similarly valued. We will take a look at SLM Corp (NASDAQ:SLM), PBF Energy Inc (NYSE:PBF), Yamana Gold Inc. (NYSE:AUY), and SiteOne Landscape Supply, Inc. (NYSE:SITE). This group of stocks’ market caps are similar to MUSA’s market cap.
|Ticker||No of HFs with positions||Total Value of HF Positions (x1000)||Change in HF Position|
View table here if you experience formatting issues.
As you can see these stocks had an average of 25.5 hedge funds with bullish positions and the average amount invested in these stocks was $321 million. That figure was $331 million in MUSA’s case. SLM Corp (NASDAQ:SLM) is the most popular stock in this table. On the other hand SiteOne Landscape Supply, Inc. (NYSE:SITE) is the least popular one with only 15 bullish hedge fund positions. Murphy USA Inc. (NYSE:MUSA) is not the most popular stock in this group but hedge fund interest is still above average. 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 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 17.4% in 2020 through March 25th but beat the market by 5.5 percentage points. Unfortunately MUSA wasn’t nearly as popular as these 20 stocks and hedge funds that were betting on MUSA were disappointed as the stock returned -27.8% 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 20 most popular stocks among hedge funds as many of these stocks already outperformed the market so far this year.
Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.
Disclosure: None. This article was originally published at Insider Monkey.