Were Hedge Funds Right About Piling Into Marriott International Inc (MAR)?
Many prominent investors, including Warren Buffett, David Tepper and Stan Druckenmiller, have been cautious regarding the current bull market and missed out as the stock market reached another high in recent weeks. On the other hand, technology hedge funds weren't timid and registered double digit market beating gains. Financials, energy and industrial stocks initially suffered the most but many of these stocks delivered strong returns since November and hedge funds actually increased their positions in these stocks. In this article we will find out how hedge fund sentiment towards Marriott International Inc (NYSE:MAR) changed recently.
Marriott International Inc (NYSE:MAR) has seen an increase in hedge fund interest lately. Marriott International Inc (NYSE:MAR) was in 58 hedge funds' portfolios at the end of December. The all time high for this statistic was previously 56. This means the bullish number of hedge fund positions in this stock currently sits at its all time high. There were 56 hedge funds in our database with MAR holdings at the end of September. Our calculations also showed that MAR isn't among the 30 most popular stocks among hedge funds (click for Q4 rankings).
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). We have been able to outperform the passive index funds by tracking the moves of corporate insiders and hedge funds, and we believe small investors can benefit a lot from reading hedge fund investor letters and 13F filings.
Boykin Curry of Eagle 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 let's analyze the recent hedge fund action surrounding Marriott International Inc (NYSE:MAR).
Do Hedge Funds Think MAR Is A Good Stock To Buy Now?
At Q4's end, a total of 58 of the hedge funds tracked by Insider Monkey were long this stock, a change of 4% from the previous quarter. The graph below displays the number of hedge funds with bullish position in MAR over the last 22 quarters. With the smart money's capital changing hands, there exists a few noteworthy hedge fund managers who were increasing their holdings substantially (or already accumulated large positions).
More specifically, Eagle Capital Management was the largest shareholder of Marriott International Inc (NYSE:MAR), with a stake worth $1641.8 million reported as of the end of December. Trailing Eagle Capital Management was Ako Capital, which amassed a stake valued at $256.8 million. Soroban Capital Partners, First Pacific Advisors LLC, and Broad Peak Investment Holdings 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 BlueDrive Global Investors allocated the biggest weight to Marriott International Inc (NYSE:MAR), around 12.2% of its 13F portfolio. Proem Advisors is also relatively very bullish on the stock, dishing out 11.04 percent of its 13F equity portfolio to MAR.
Now, key money managers were leading the bulls' herd. XN Exponent Advisors, managed by Gaurav Kapadia, assembled the most outsized position in Marriott International Inc (NYSE:MAR). XN Exponent Advisors had $132.3 million invested in the company at the end of the quarter. Daniel S. Och's OZ Management also made a $123.2 million investment in the stock during the quarter. The other funds with new positions in the stock are Gavin Baker's Atreides Management, Anand Parekh's Alyeska Investment Group, and Richard Gerson and Navroz D. Udwadia's Falcon Edge Capital.
Let's check out hedge fund activity in other stocks similar to Marriott International Inc (NYSE:MAR). We will take a look at Enterprise Products Partners L.P. (NYSE:EPD), ConocoPhillips (NYSE:COP), General Dynamics Corporation (NYSE:GD), IDEXX Laboratories, Inc. (NASDAQ:IDXX), Constellation Brands, Inc. (NYSE:STZ), Sumitomo Mitsui Financial Grp, Inc. (NYSE:SMFG), and The Kraft Heinz Company (NASDAQ:KHC). All of these stocks' market caps resemble MAR's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position EPD,30,316886,0 COP,49,687393,4 GD,40,4955250,3 IDXX,46,2697821,5 STZ,58,1768371,5 SMFG,10,92749,2 KHC,36,11558217,-3 Average,38.4,3153812,2.3 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 38.4 hedge funds with bullish positions and the average amount invested in these stocks was $3154 million. That figure was $3421 million in MAR's case. Constellation Brands, Inc. (NYSE:STZ) is the most popular stock in this table. On the other hand Sumitomo Mitsui Financial Grp, Inc. (NYSE:SMFG) is the least popular one with only 10 bullish hedge fund positions. Marriott International Inc (NYSE:MAR) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for MAR is 87. 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. Hedge funds were also right about betting on MAR, though not to the same extent, as the stock returned 12.6% since Q4 (through April 30th) and outperformed the market as well.
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Disclosure: None. This article was originally published at Insider Monkey.
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