Were Hedge Funds Right About Oracle Corporation (ORCL)?
With the fourth-quarter round of 13F filings behind us it is time to take a look at the stocks in which some of the best money managers in the world preferred to invest or sell heading into the first quarter of 2021. One of these stocks was Oracle Corporation (NYSE:ORCL).
Is Oracle Corporation (NYSE:ORCL) the right pick for your portfolio? The best stock pickers were taking a pessimistic view. The number of long hedge fund bets fell by 4 recently. Oracle Corporation (NYSE:ORCL) was in 52 hedge funds' portfolios at the end of the fourth quarter of 2020. The all time high for this statistic is 74. Our calculations also showed that ORCL isn't among the 30 most popular stocks among hedge funds (click for Q4 rankings).
Why do we pay any attention at all to hedge fund sentiment? Our research has shown that a select group of hedge fund holdings outperformed the S&P 500 ETFs by 124 percentage points since March 2017 (see the details here). That's why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
Phillip Gross of Adage Capital
At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, lithium mining is one of the fastest growing industries right now, so we are checking out stock pitches like this emerging lithium stock. We go through lists like the 10 best hydrogen fuel cell 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. 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. Keeping this in mind we're going to review the latest hedge fund action surrounding Oracle Corporation (NYSE:ORCL).
Do Hedge Funds Think ORCL Is A Good Stock To Buy Now?
Heading into the first quarter of 2021, a total of 52 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -7% from one quarter earlier. The graph below displays the number of hedge funds with bullish position in ORCL 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 stakes meaningfully (or already accumulated large positions).
More specifically, Fisher Asset Management was the largest shareholder of Oracle Corporation (NYSE:ORCL), with a stake worth $901.4 million reported as of the end of December. Trailing Fisher Asset Management was AQR Capital Management, which amassed a stake valued at $245.2 million. Pzena Investment Management, D E Shaw, and Adage Capital Management 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 Amitell Capital allocated the biggest weight to Oracle Corporation (NYSE:ORCL), around 2.13% of its 13F portfolio. Wallace R. Weitz & Co. is also relatively very bullish on the stock, setting aside 2.03 percent of its 13F equity portfolio to ORCL.
Due to the fact that Oracle Corporation (NYSE:ORCL) has experienced declining sentiment from the aggregate hedge fund industry, we can see that there was a specific group of hedge funds that decided to sell off their entire stakes heading into Q1. Intriguingly, Michael Gelband's ExodusPoint Capital dumped the biggest stake of the 750 funds followed by Insider Monkey, worth about $20.6 million in stock. Robert Rodriguez and Steven Romick's fund, First Pacific Advisors LLC, also dumped its stock, about $16.2 million worth. These moves are intriguing to say the least, as total hedge fund interest was cut by 4 funds heading into Q1.
Let's check out hedge fund activity in other stocks similar to Oracle Corporation (NYSE:ORCL). We will take a look at AbbVie Inc (NYSE:ABBV), Cisco Systems, Inc. (NASDAQ:CSCO), Thermo Fisher Scientific Inc. (NYSE:TMO), Broadcom Inc (NASDAQ:AVGO), Exxon Mobil Corporation (NYSE:XOM), Accenture Plc (NYSE:ACN), and QUALCOMM, Incorporated (NASDAQ:QCOM). This group of stocks' market values are similar to ORCL's market value.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position ABBV,83,6965013,1 CSCO,60,4974309,1 TMO,89,5470797,9 AVGO,59,3342445,0 XOM,63,2208617,11 ACN,50,2133706,4 QCOM,85,2727547,-2 Average,69.9,3974633,3.4 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 69.9 hedge funds with bullish positions and the average amount invested in these stocks was $3975 million. That figure was $2450 million in ORCL's case. Thermo Fisher Scientific Inc. (NYSE:TMO) is the most popular stock in this table. On the other hand Accenture Plc (NYSE:ACN) is the least popular one with only 50 bullish hedge fund positions. Oracle Corporation (NYSE:ORCL) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for ORCL is 24.6. 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 10 most popular stocks among hedge funds returned 90.7% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 35 percentage points. These stocks gained 13.6% in 2021 through April 30th and still beat the market by 1.6 percentage points. A small number of hedge funds were also right about betting on ORCL as the stock returned 18.1% since the end of the fourth quarter (through 4/30) and outperformed the market by an even larger margin.
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Disclosure: None. This article was originally published at Insider Monkey.
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