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In this article we are going to use hedge fund sentiment as a tool and determine whether Marsh & McLennan Companies, Inc. (NYSE:MMC) is a good investment right now. We like to analyze hedge fund sentiment before conducting days of in-depth research. We do so because hedge funds and other elite investors have numerous Ivy League graduates, expert network advisers, and supply chain tipsters working or consulting for them. There is not a shortage of news stories covering failed hedge fund investments and it is a fact that hedge funds' picks don't beat the market 100% of the time, but their consensus picks have historically done very well and have outperformed the market after adjusting for risk.
Marsh & McLennan Companies, Inc. (NYSE:MMC) has experienced an increase in hedge fund sentiment of late. Marsh & McLennan Companies, Inc. (NYSE:MMC) was in 42 hedge funds' portfolios at the end of September. The all time high for this statistic is 43. Our calculations also showed that MMC isn't among the 30 most popular stocks among hedge funds (click for Q3 rankings).
Andreas Halvorsen of Viking Global
At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, lithium prices have more than doubled over the past year, so we go through lists like the 10 best EV stocks to pick the next Tesla 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. Keeping this in mind let's take a gander at the latest hedge fund action regarding Marsh & McLennan Companies, Inc. (NYSE:MMC).
Do Hedge Funds Think MMC Is A Good Stock To Buy Now?
At the end of September, a total of 42 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 2% from the second quarter of 2021. By comparison, 35 hedge funds held shares or bullish call options in MMC a year ago. With hedgies' sentiment swirling, there exists an "upper tier" of notable hedge fund managers who were boosting their stakes meaningfully (or already accumulated large positions).
When looking at the institutional investors followed by Insider Monkey, Warren Buffett's Berkshire Hathaway has the number one position in Marsh & McLennan Companies, Inc. (NYSE:MMC), worth close to $415.2 million, comprising 0.1% of its total 13F portfolio. Coming in second is Arrowstreet Capital, managed by Peter Rathjens, Bruce Clarke and John Campbell, which holds a $387.7 million position; 0.5% of its 13F portfolio is allocated to the company. Remaining professional money managers with similar optimism consist of Brian Ashford-Russell and Tim Woolley's Polar Capital, Andreas Halvorsen's Viking Global and Barry Dargan's 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 8.95% of its 13F portfolio. Bishop Rock Capital is also relatively very bullish on the stock, earmarking 5.2 percent of its 13F equity portfolio to MMC.
As industrywide interest jumped, specific money managers were breaking ground themselves. Tudor Investment Corp, managed by Paul Tudor Jones, established the most valuable position in Marsh & McLennan Companies, Inc. (NYSE:MMC). Tudor Investment Corp had $10.1 million invested in the company at the end of the quarter. Jinghua Yan's TwinBeech Capital also made a $4.7 million investment in the stock during the quarter. The other funds with new positions in the stock are Michael Gelband's ExodusPoint Capital, Qing Li's Sciencast Management, and Greg Poole's Echo Street Capital Management.
Let's also examine hedge fund activity in other stocks similar to Marsh & McLennan Companies, Inc. (NYSE:MMC). These stocks are General Motors Company (NYSE:GM), Fidelity National Information Services Inc. (NYSE:FIS), Duke Energy Corporation (NYSE:DUK), Crown Castle International Corp. (NYSE:CCI), Chubb Limited (NYSE:CB), The Bank of Nova Scotia (NYSE:BNS), and The Sherwin-Williams Company (NYSE:SHW). This group of stocks' market caps are closest to MMC's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position GM,77,6416552,-9 FIS,69,6044245,-3 DUK,32,687541,-4 CCI,45,2089073,3 CB,30,1272774,-12 BNS,17,193321,3 SHW,44,1576816,-5 Average,44.9,2611475,-3.9 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 44.9 hedge funds with bullish positions and the average amount invested in these stocks was $2611 million. That figure was $1987 million in MMC's case. General Motors Company (NYSE:GM) is the most popular stock in this table. On the other hand The Bank of Nova Scotia (NYSE:BNS) is the least popular one with only 17 bullish hedge fund positions. Marsh & McLennan Companies, Inc. (NYSE:MMC) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for MMC is 56.1. 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 5 most popular stocks among hedge funds returned 95.8% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 40 percentage points. These stocks gained 28.6% in 2021 through November 30th and still beat the market by 5.6 percentage points. A small number of hedge funds were also right about betting on MMC as the stock returned 8.7% since the end of the third quarter (through 11/30) and outperformed the market by an even larger margin.
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Disclosure: None. This article was originally published at Insider Monkey.