Hedge funds and large money managers usually invest with a focus on the long-term horizon and, therefore, short-lived dips or bumps on the charts usually don’t make them change their opinion towards a company. This time it may be different. The coronavirus pandemic destroyed the high correlations among major industries and asset classes. We are now in a stock pickers market where fundamentals of a stock have more effect on the price than the overall direction of the market. As a result we observe sudden and large changes in hedge fund positions depending on the news flow. Let’s take a look at the hedge fund sentiment towards Marriott International Inc (NYSE:MAR) to find out whether there were any major changes in hedge funds’ views.
Is MAR stock a buy or sell? Marriott International Inc (NYSE:MAR) was in 58 hedge funds’ portfolios at the end of the fourth quarter of 2020. The all time high for this statistic is 56. This means the bullish number of hedge fund positions in this stock currently sits at its all time high. MAR has experienced an increase in hedge fund sentiment recently. There were 56 hedge funds in our database with MAR holdings at the end of September. Our calculations also showed that MAR isn’t among the 30 most popular stocks among hedge funds (click for Q4 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 monthly stock picks returned 197% since March 2017 and outperformed the S&P 500 ETFs by more than 124 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.
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 take a gander at the fresh hedge fund action regarding Marriott International Inc (NYSE:MAR).
Do Hedge Funds Think MAR Is A Good Stock To Buy Now?
Heading into the first quarter of 2021, a total of 58 of the hedge funds tracked by Insider Monkey were long this stock, a change of 4% from the previous quarter. By comparison, 37 hedge funds held shares or bullish call options in MAR a year ago. So, let’s see which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
Among these funds, Eagle Capital Management held the most valuable stake in Marriott International Inc (NYSE:MAR), which was worth $1641.8 million at the end of the fourth quarter. On the second spot was Ako Capital which amassed $256.8 million worth of shares. Soroban Capital Partners, First Pacific Advisors LLC, and Broad Peak Investment Holdings were also very fond of the stock, becoming one of the largest hedge fund holders of the company. In terms of the portfolio weights assigned to each position BlueDrive Global Investors allocated the biggest weight to Marriott International Inc (NYSE:MAR), around 12.2% of its 13F portfolio. Proem Advisors is also relatively very bullish on the stock, setting aside 11.04 percent of its 13F equity portfolio to MAR.
Now, specific money managers were leading the bulls’ herd. XN Exponent Advisors, managed by Gaurav Kapadia, initiated the biggest position in Marriott International Inc (NYSE:MAR). XN Exponent Advisors had $132.3 million invested in the company at the end of the quarter. Daniel S. Och’s OZ Management also initiated a $123.2 million position during the quarter. The other funds with brand new MAR positions are Gavin Baker’s Atreides Management, Anand Parekh’s Alyeska Investment Group, and Richard Gerson and Navroz D. Udwadia’s Falcon Edge Capital.
Let’s go over hedge fund activity in other stocks – not necessarily in the same industry as Marriott International Inc (NYSE:MAR) but similarly valued. We will take a look at Enterprise Products Partners L.P. (NYSE:EPD), ConocoPhillips (NYSE:COP), General Dynamics Corporation (NYSE:GD), IDEXX Laboratories, Inc. (NASDAQ:IDXX), Constellation Brands, Inc. (NYSE:STZ), Sumitomo Mitsui Financial Grp, Inc. (NYSE:SMFG), and The Kraft Heinz Company (NASDAQ:KHC). This group of stocks’ market valuations are closest to MAR’s market valuation.
|Ticker||No of HFs with positions||Total Value of HF Positions (x1000)||Change in HF Position|
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As you can see these stocks had an average of 38.4 hedge funds with bullish positions and the average amount invested in these stocks was $3154 million. That figure was $3421 million in MAR’s case. Constellation Brands, Inc. (NYSE:STZ) is the most popular stock in this table. On the other hand Sumitomo Mitsui Financial Grp, Inc. (NYSE:SMFG) is the least popular one with only 10 bullish hedge fund positions. Marriott International Inc (NYSE:MAR) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for MAR is 87. 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. 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. Hedge funds were also right about betting on MAR as the stock returned 15.4% since the end of Q4 (through 3/19) and outperformed the market. Hedge funds were rewarded for their relative bullishness.
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Disclosure: None. This article was originally published at Insider Monkey.