How Did Marriott International Inc (MAR) Compare Against Hedge Fund Darlings in 2019?

Investing in hedge funds can bring large profits, but it’s not for everybody, since hedge funds are available only for high-net-worth individuals. They generate significant returns for investors to justify their large fees and they allocate a lot of time and employ complex research processes to determine the best stocks to invest in. A particularly interesting group of stocks that hedge funds like is the small-caps. The huge amount of capital does not allow hedge funds to invest a lot in small-caps, but our research showed that their most popular small-cap ideas are less efficiently priced and generate stronger returns than their large- and mega-cap picks and the broader market. That is why we pay special attention to the hedge fund activity in the small-cap space. Nevertheless, it is also possible to find underpriced large-cap stocks by following the hedge funds’ moves. In this article, we look at what hedge funds think of Marriott International Inc (NYSE:MAR) based on that data.

Is Marriott International Inc (NYSE:MAR) a marvelous investment now? Hedge funds are actually in an optimistic mood. The number of bullish hedge fund positions inched up by 10 recently. Our calculations also showed that MAR isn’t among the 30 most popular stocks among hedge funds (click for Q3 rankings and see the video at the end of this article for Q2 rankings).

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 flagship best performing hedge funds strategy returned 91% since May 2014 and outperformed the Russell 2000 ETFs by nearly 40 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.

Tom Gayner

Tom Gayner of Markel Gayner 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. This December, we recommended Adams Energy as a one-way bet based on an under-the-radar fund manager’s investor letter and the stock is still extremely cheap despite already gaining 20 percent. Keeping this in mind we’re going to check out the recent hedge fund action encompassing Marriott International Inc (NYSE:MAR).

How are hedge funds trading Marriott International Inc (NASDAQ:MAR)?

Heading into the fourth quarter of 2019, a total of 37 of the hedge funds tracked by Insider Monkey were long this stock, a change of 37% from the second quarter of 2019. On the other hand, there were a total of 29 hedge funds with a bullish position in MAR a year ago. With the smart money’s sentiment swirling, there exists an “upper tier” of notable hedge fund managers who were boosting their holdings substantially (or already accumulated large positions).

The largest stake in Marriott International Inc (NASDAQ:MAR) was held by Eagle Capital Management, which reported holding $1195 million worth of stock at the end of September. It was followed by Soroban Capital Partners with a $602.7 million position. Other investors bullish on the company included Markel Gayner Asset Management, Millennium Management, and Two Sigma Advisors. In terms of the portfolio weights assigned to each position Soroban Capital Partners allocated the biggest weight to Marriott International Inc (NASDAQ:MAR), around 8.48% of its 13F portfolio. Steel Canyon Capital is also relatively very bullish on the stock, setting aside 5.42 percent of its 13F equity portfolio to MAR.

With a general bullishness amongst the heavyweights, key money managers were breaking ground themselves. Balyasny Asset Management, managed by Dmitry Balyasny, created the most valuable position in Marriott International Inc (NASDAQ:MAR). Balyasny Asset Management had $51.4 million invested in the company at the end of the quarter. Paul Tudor Jones’s Tudor Investment Corp also made a $12.5 million investment in the stock during the quarter. The following funds were also among the new MAR investors: Donald Sussman’s Paloma Partners, Karim Abbadi and Edward McBride’s Centiva Capital, and Perella Weinberg Partners.

Let’s also examine hedge fund activity in other stocks similar to Marriott International Inc (NASDAQ:MAR). These stocks are Truist Financial Corporation (NYSE:BBT), Dollar General Corp. (NYSE:DG), SYSCO Corporation (NYSE:SYY), and ING Groep N.V. (NYSE:ING). All of these stocks’ market caps match MAR’s market cap.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
BBT 26 370776 3
DG 45 2157250 8
SYY 22 3016032 -9
ING 9 542281 1
Average 25.5 1521585 0.75

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 $1522 million. That figure was $2446 million in MAR’s case. Dollar General Corp. (NYSE:DG) is the most popular stock in this table. On the other hand ING Groep N.V. (NYSE:ING) is the least popular one with only 9 bullish hedge fund positions. Marriott International Inc (NASDAQ:MAR) 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. Hedge funds were also right about betting on MAR as the stock returned 41.5% in 2019 and outperformed the market. Hedge funds were rewarded for their relative bullishness.
5 Most Popular Stocks Among Hedge Funds
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.