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In this article we will analyze whether Markel Corporation (NYSE:MKL) 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 by double digits annually.
Is MKL stock a buy? Prominent investors were becoming hopeful. The number of long hedge fund bets moved up by 2 recently. Markel Corporation (NYSE:MKL) was in 36 hedge funds' portfolios at the end of December. The all time high for this statistic is 37. Our calculations also showed that MKL isn't among the 30 most popular stocks among hedge funds (click for Q4 rankings). There were 34 hedge funds in our database with MKL positions at the end of the third quarter.
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' 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 124 percentage points since March 2017 (see the details here).
Dmitry Balyasny of Balyasny Asset Management
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 check out the fresh hedge fund action regarding Markel Corporation (NYSE:MKL).
Do Hedge Funds Think MKL Is A Good Stock To Buy Now?
At fourth quarter's end, a total of 36 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 6% from the previous quarter. On the other hand, there were a total of 37 hedge funds with a bullish position in MKL 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.
According to Insider Monkey's hedge fund database, Akre Capital Management, managed by Charles Akre, holds the number one position in Markel Corporation (NYSE:MKL). Akre Capital Management has a $320.9 million position in the stock, comprising 2.2% of its 13F portfolio. Sitting at the No. 2 spot is Polar Capital, led by Brian Ashford-Russell and Tim Woolley, holding a $131.3 million position; 0.8% of its 13F portfolio is allocated to the stock. Remaining hedge funds and institutional investors that are bullish include Renaissance Technologies, Israel Englander's Millennium Management and Ken Griffin's Citadel Investment Group. In terms of the portfolio weights assigned to each position Giverny Capital allocated the biggest weight to Markel Corporation (NYSE:MKL), around 3.71% of its 13F portfolio. Wallace R. Weitz & Co. is also relatively very bullish on the stock, designating 2.51 percent of its 13F equity portfolio to MKL.
Consequently, specific money managers were leading the bulls' herd. Echo Street Capital Management, managed by Greg Poole, established the most valuable position in Markel Corporation (NYSE:MKL). Echo Street Capital Management had $16.6 million invested in the company at the end of the quarter. Daniel Johnson's Gillson Capital also made a $2.2 million investment in the stock during the quarter. The following funds were also among the new MKL investors: Alec Litowitz and Ross Laser's Magnetar Capital, John Overdeck and David Siegel's Two Sigma Advisors, and Parvinder Thiara's Athanor Capital.
Let's now review hedge fund activity in other stocks - not necessarily in the same industry as Markel Corporation (NYSE:MKL) but similarly valued. These stocks are Tradeweb Markets Inc. (NASDAQ:TW), Jacobs Engineering Group Inc. (NYSE:J), Plug Power, Inc. (NASDAQ:PLUG), Avangrid, Inc. (NYSE:AGR), Cincinnati Financial Corporation (NASDAQ:CINF), Cognex Corporation (NASDAQ:CGNX), and Godaddy Inc (NYSE:GDDY). This group of stocks' market values are similar to MKL's market value.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position TW,31,330948,7 J,30,1038493,3 PLUG,21,734364,0 AGR,10,64954,-1 CINF,20,842405,1 CGNX,31,382597,3 GDDY,44,2610164,0 Average,26.7,857704,1.9 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 26.7 hedge funds with bullish positions and the average amount invested in these stocks was $858 million. That figure was $942 million in MKL's case. Godaddy Inc (NYSE:GDDY) is the most popular stock in this table. On the other hand Avangrid, Inc. (NYSE:AGR) is the least popular one with only 10 bullish hedge fund positions. Markel Corporation (NYSE:MKL) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for MKL is 74.4. 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 7.9% in 2021 through April 1st and still beat the market by 0.4 percentage points. Hedge funds were also right about betting on MKL as the stock returned 12% since the end of Q4 (through 4/1) 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.