We can judge whether Marriott International Inc (NASDAQ:MAR) is a good investment right now by following the lead of some of the best investors in the world and piggybacking their ideas. There's no better way to get these firms' immense resources and analytical capabilities working for us than to follow their lead into their best ideas. While not all of these picks will be winners, our research shows that these picks historically outperformed the market when we factor in known risk factors.
Marriott International Inc (NASDAQ:MAR) investors should pay attention to an increase in enthusiasm from smart money lately even though overall hedge fund sentiment towards the stock still sits near its all time low. Our calculations also showed that MAR isn't among the 30 most popular stocks among hedge funds (see the video at the end of this article).
Hedge funds' reputation as shrewd investors has been tarnished in the last decade as their hedged returns couldn't keep up with the unhedged returns of the market indices. Our research has shown that hedge funds' large-cap stock picks indeed failed to beat the market between 1999 and 2016. However, we were able to identify in advance a select group of hedge fund holdings that outperformed the market by 40 percentage points since May 2014 through May 30, 2019 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that'll significantly underperform the market. We have been tracking and sharing the list of these stocks since February 2017 and they lost 25.7% through September 30, 2019. That's why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
[caption id="attachment_30647" align="aligncenter" width="478"] Boykin Curry of Eagle Capital[/caption]
Unlike some fund managers who are betting on Dow reaching 40000 in a year, our long-short investment strategy doesn't rely on bull markets to deliver double digit returns. We only rely on hedge fund buy/sell signals. Let's check out the latest hedge fund action encompassing Marriott International Inc (NASDAQ:MAR).
Hedge fund activity in Marriott International Inc (NASDAQ:MAR)
Heading into the third quarter of 2019, a total of 27 of the hedge funds tracked by Insider Monkey were long this stock, a change of 8% from the first quarter of 2019. By comparison, 42 hedge funds held shares or bullish call options in MAR a year ago. With the smart money's sentiment swirling, there exists a select group of key hedge fund managers who were upping their stakes meaningfully (or already accumulated large positions).
Among these funds, Eagle Capital Management held the most valuable stake in Marriott International Inc (NASDAQ:MAR), which was worth $1336.8 million at the end of the second quarter. On the second spot was Soroban Capital Partners which amassed $679.9 million worth of shares. Moreover, Markel Gayner Asset Management and Point72 Asset Management were also bullish on Marriott International Inc (NASDAQ:MAR), allocating a large percentage of their portfolios to this stock.
Now, key hedge funds were leading the bulls' herd. Point72 Asset Management, managed by Steve Cohen, assembled the most valuable position in Marriott International Inc (NASDAQ:MAR). Point72 Asset Management had $62.2 million invested in the company at the end of the quarter. Anand Parekh's Alyeska Investment Group also made a $50.2 million investment in the stock during the quarter. The following funds were also among the new MAR investors: David Harding's Winton Capital Management, John Overdeck and David Siegel's Two Sigma Advisors, and Michael Gelband's ExodusPoint Capital.
Let's go over hedge fund activity in other stocks - not necessarily in the same industry as Marriott International Inc (NASDAQ:MAR) but similarly valued. We will take a look at American International Group Inc (NYSE:AIG), Kimberly-Clark Corporation (NYSE:KMB), Infosys Limited (NYSE:INFY), and HCA Healthcare Inc (NYSE:HCA). This group of stocks' market caps are similar to MAR's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position AIG,41,2270404,4 KMB,40,1546551,4 INFY,25,1151865,5 HCA,51,3049357,0 Average,39.25,2004544,3.25 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 39.25 hedge funds with bullish positions and the average amount invested in these stocks was $2005 million. That figure was $2522 million in MAR's case. HCA Healthcare Inc (NYSE:HCA) is the most popular stock in this table. On the other hand Infosys Limited (NYSE:INFY) is the least popular one with only 25 bullish hedge fund positions. Marriott International Inc (NASDAQ:MAR) is not the least popular stock in this group but hedge fund interest is still below average. This is a slightly negative signal and we'd rather spend our time researching stocks that hedge funds are piling on. Our calculations showed that top 20 most popular stocks among hedge funds returned 24.4% in 2019 through September 30th and outperformed the S&P 500 ETF (SPY) by 4 percentage points. Unfortunately MAR wasn't nearly as popular as these 20 stocks (hedge fund sentiment was quite bearish); MAR investors were disappointed as the stock returned -11% during the third quarter and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 20 most popular stocks among hedge funds as many of these stocks already outperformed the market so far in 2019. 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.