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 have processed the filings of the more than 887 world-class investment firms that we track and now have access to the collective wisdom contained in these filings, which are based on their December 31st holdings, data that is available nowhere else. Should you consider Marsh & McLennan Companies, Inc. (NYSE:MMC) for your portfolio? We’ll look to this invaluable collective wisdom for the answer.
Is MMC stock a buy or sell? Investors who are in the know were betting on the stock. The number of long hedge fund bets advanced by 8 lately. Marsh & McLennan Companies, Inc. (NYSE:MMC) was in 43 hedge funds’ portfolios at the end of the fourth quarter of 2020. The all time high for this statistic is 38. This means the bullish number of hedge fund positions in this stock currently sits at its all time high. Our calculations also showed that MMC isn’t among the 30 most popular stocks among hedge funds (click for Q4 rankings). There were 35 hedge funds in our database with MMC positions at the end of the third quarter.
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. For example, the House passed a landmark bill decriminalizing marijuana. So, we are checking out this under the radar cannabis stock right now. We go through lists like the 10 best battery stocks to buy to identify the next stock with 10x upside potential. 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 website. With all of this in mind we’re going to take a look at the key hedge fund action encompassing Marsh & McLennan Companies, Inc. (NYSE:MMC).
Do Hedge Funds Think MMC Is A Good Stock To Buy Now?
At fourth quarter’s end, a total of 43 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 23% from the previous quarter. The graph below displays the number of hedge funds with bullish position in MMC over the last 22 quarters. With the smart money’s capital changing hands, there exists a select group of key hedge fund managers who were increasing their holdings considerably (or already accumulated large positions).
The largest stake in Marsh & McLennan Companies, Inc. (NYSE:MMC) was held by Berkshire Hathaway, which reported holding $499.3 million worth of stock at the end of December. It was followed by Diamond Hill Capital with a $223.6 million position. Other investors bullish on the company included Polar Capital, Viking Global, and Intermede Investment Partners. In terms of the portfolio weights assigned to each position 3G Sahana Capital Management allocated the biggest weight to Marsh & McLennan Companies, Inc. (NYSE:MMC), around 11.38% of its 13F portfolio. Bishop Rock Capital is also relatively very bullish on the stock, designating 5.2 percent of its 13F equity portfolio to MMC.
Now, key money managers have jumped into Marsh & McLennan Companies, Inc. (NYSE:MMC) headfirst. Berkshire Hathaway, managed by Warren Buffett, created the most outsized position in Marsh & McLennan Companies, Inc. (NYSE:MMC). Berkshire Hathaway had $499.3 million invested in the company at the end of the quarter. Andreas Halvorsen’s Viking Global also made a $154.5 million investment in the stock during the quarter. The other funds with brand new MMC positions are Dmitry Balyasny’s Balyasny Asset Management, Michael Kharitonov and Jon David McAuliffe’s Voleon Capital, and Nicholas Bagnall’s Te Ahumairangi Investment Management.
Let’s check out hedge fund activity in other stocks – not necessarily in the same industry as Marsh & McLennan Companies, Inc. (NYSE:MMC) but similarly valued. These stocks are VMware, Inc. (NYSE:VMW), Atlassian Corporation Plc (NASDAQ:TEAM), The Progressive Corporation (NYSE:PGR), Ferrari N.V. (NYSE:RACE), ABB Ltd (NYSE:ABB), Workday Inc (NYSE:WDAY), and Takeda Pharmaceutical Company Limited (NYSE:TAK). All of these stocks’ market caps are closest to MMC’s market cap.
|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 41 hedge funds with bullish positions and the average amount invested in these stocks was $2051 million. That figure was $1747 million in MMC’s case. Workday Inc (NYSE:WDAY) is the most popular stock in this table. On the other hand ABB Ltd (NYSE:ABB) is the least popular one with only 8 bullish hedge fund positions. Marsh & McLennan Companies, Inc. (NYSE:MMC) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for MMC is 64.3. 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 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 beat the market again by 0.8 percentage points. Unfortunately MMC wasn’t nearly as popular as these 30 stocks and hedge funds that were betting on MMC were disappointed as the stock returned 0.3% since the end of December (through 3/19) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 30 most popular stocks among hedge funds as many of these stocks already outperformed the market since 2019.
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Disclosure: None. This article was originally published at Insider Monkey.