The latest 13F reporting period has come and gone, and Insider Monkey is again at the forefront when it comes to making use of this gold mine of data. We at Insider Monkey have plowed through 887 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 December 31st. In this article we look at what those investors think of 3M Company (NYSE:MMM).
Is MMM stock a buy or sell? 3M Company (NYSE:MMM) has experienced a decrease in activity from the world’s largest hedge funds recently. 3M Company (NYSE:MMM) was in 44 hedge funds’ portfolios at the end of December. The all time high for this statistic is 56. There were 56 hedge funds in our database with MMM positions at the end of the third quarter. Our calculations also showed that MMM isn’t among the 30 most popular stocks among hedge funds (click for Q4 rankings).
So, why do we pay attention to hedge fund sentiment before making any investment decisions? Our research has shown that hedge funds’ small-cap stock picks managed to beat the market by double digits annually between 1999 and 2016, but the margin of outperformance has been declining in recent years. Nevertheless, we were still able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by more than 124 percentage points since March 2017 (see the details here).
At Insider Monkey we leave no stone unturned when looking for the next great investment idea. Recently Oregon became the first state to legalize psychedelic mushrooms which are shown to have promising results in treating depression, addiction, and PTSD in early stage academic studies. So, we are checking out this psychedelic drug stock idea right now. We go through lists like the 10 best biotech stocks to invest in to pick the next stock 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 (or at the end of this article). Now we’re going to view the recent hedge fund action regarding 3M Company (NYSE:MMM).
Do Hedge Funds Think MMM Is A Good Stock To Buy Now?
At Q4’s end, a total of 44 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -21% from one quarter earlier. On the other hand, there were a total of 46 hedge funds with a bullish position in MMM a year ago. So, let’s check out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
The largest stake in 3M Company (NYSE:MMM) was held by Fisher Asset Management, which reported holding $856.3 million worth of stock at the end of December. It was followed by AQR Capital Management with a $181.9 million position. Other investors bullish on the company included Adage Capital Management, Graham Capital Management, and Markel Gayner Asset Management. In terms of the portfolio weights assigned to each position Game Creek Capital allocated the biggest weight to 3M Company (NYSE:MMM), around 2.77% of its 13F portfolio. Graham Capital Management is also relatively very bullish on the stock, setting aside 1.92 percent of its 13F equity portfolio to MMM.
Seeing as 3M Company (NYSE:MMM) has faced declining sentiment from the smart money, it’s easy to see that there lies a certain “tier” of money managers that elected to cut their entire stakes by the end of the fourth quarter. It’s worth mentioning that Renaissance Technologies sold off the largest stake of all the hedgies followed by Insider Monkey, valued at close to $53.8 million in stock. Paul Marshall and Ian Wace’s fund, Marshall Wace LLP, also dropped its stock, about $33.2 million worth. These moves are intriguing to say the least, as total hedge fund interest dropped by 12 funds by the end of the fourth quarter.
Let’s also examine hedge fund activity in other stocks similar to 3M Company (NYSE:MMM). These stocks are American Tower Corporation (REIT) (NYSE:AMT), The Charles Schwab Corporation (NYSE:SCHW), Lockheed Martin Corporation (NYSE:LMT), Caterpillar Inc. (NYSE:CAT), Square, Inc. (NYSE:SQ), American Express Company (NYSE:AXP), and Zoom Video Communications, Inc. (NASDAQ:ZM). This group of stocks’ market valuations are similar to MMM’s market valuation.
|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 62.3 hedge funds with bullish positions and the average amount invested in these stocks was $7513 million. That figure was $1367 million in MMM’s case. Square, Inc. (NYSE:SQ) is the most popular stock in this table. On the other hand Lockheed Martin Corporation (NYSE:LMT) is the least popular one with only 53 bullish hedge fund positions. Compared to these stocks 3M Company (NYSE:MMM) is even less popular than LMT. Our overall hedge fund sentiment score for MMM is 16.6. 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. Hedge funds clearly dropped the ball on MMM as the stock delivered strong returns, though hedge funds’ consensus picks still generated respectable returns. Our calculations showed that top 30 most popular stocks among hedge funds returned 81.2% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 26 percentage points. These stocks gained 5.3% in 2021 through March 19th and still beat the market by 0.8 percentage points. A small number of hedge funds were also right about betting on MMM as the stock returned 8.9% since Q4 (through March 19th) and outperformed the market by an even larger margin.
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Disclosure: None. This article was originally published at Insider Monkey.