Hedge Funds and other institutional investors have just completed filing their 13Fs with the Securities and Exchange Commission, revealing their equity portfolios as of the end of September. At Insider Monkey, we follow nearly 900 active hedge funds and notable investors and by analyzing their 13F filings, we can determine the stocks that they are collectively bullish on. One of their picks is Marriott International Inc (NASDAQ:MAR), so let’s take a closer look at the sentiment that surrounds it in the current quarter.
Marriott International Inc (NASDAQ:MAR) shares haven't seen a lot of action during the second quarter. Overall, hedge fund sentiment was unchanged. The stock was in 58 hedge funds' portfolios at the end of the first quarter of 2021. Our calculations also showed that MAR isn't among the 30 most popular stocks among hedge funds (click for Q1 rankings). At the end of this article we will also compare MAR to other stocks including Enterprise Products Partners L.P. (NYSE:EPD), Freeport-McMoRan Inc. (NYSE:FCX), and Ford Motor Company (NYSE:F) to get a better sense of its popularity.
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 115 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
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Do Hedge Funds Think MAR Is A Good Stock To Buy Now?
At the end of March, a total of 58 of the hedge funds tracked by Insider Monkey were long this stock, a change of 0% from the previous quarter. By comparison, 47 hedge funds held shares or bullish call options in MAR a year ago. With hedge funds' positions undergoing their usual ebb and flow, there exists a select group of key hedge fund managers who were upping their stakes meaningfully (or already accumulated large positions).
Of the funds tracked by Insider Monkey, Eagle Capital Management, managed by Boykin Curry, holds the biggest position in Marriott International Inc (NASDAQ:MAR). Eagle Capital Management has a $1.6582 billion position in the stock, comprising 5.1% of its 13F portfolio. The second most bullish fund manager is First Pacific Advisors LLC, managed by Robert Rodriguez and Steven Romick, which holds a $183.3 million position; the fund has 2.5% of its 13F portfolio invested in the stock. Other hedge funds and institutional investors with similar optimism comprise Martin Taylor's Crake Asset Management, Hyder Ahmad's Broad Peak Investment Holdings and Gaurav Kapadia's XN Exponent Advisors. In terms of the portfolio weights assigned to each position Proem Advisors allocated the biggest weight to Marriott International Inc (NASDAQ:MAR), around 9.93% of its 13F portfolio. Broad Peak Investment Holdings is also relatively very bullish on the stock, setting aside 9.73 percent of its 13F equity portfolio to MAR.
Seeing as Marriott International Inc (NASDAQ:MAR) has experienced falling interest from hedge fund managers, we can see that there exists a select few money managers that elected to cut their entire stakes by the end of the first quarter. At the top of the heap, Eric W. Mandelblatt and Gaurav Kapadia's Soroban Capital Partners dumped the largest position of the 750 funds tracked by Insider Monkey, valued at close to $242.7 million in stock, and Richard Gerson and Navroz D. Udwadia's Falcon Edge Capital was right behind this move, as the fund dumped about $12.8 million worth. These transactions are intriguing to say the least, as aggregate hedge fund interest stayed the same (this is a bearish signal in our experience).
Let's now take a look at hedge fund activity in other stocks similar to Marriott International Inc (NASDAQ:MAR). These stocks are Enterprise Products Partners L.P. (NYSE:EPD), Freeport-McMoRan Inc. (NYSE:FCX), Ford Motor Company (NYSE:F), ING Groep N.V. (NYSE:ING), Dow Inc. (NYSE:DOW), Walgreens Boots Alliance Inc (NASDAQ:WBA), and Kimberly Clark Corporation (NYSE:KMB). All of these stocks' market caps are closest to MAR's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position EPD,26,299289,-4 FCX,68,3290981,7 F,49,2197658,8 ING,10,532082,1 DOW,41,717981,-6 WBA,41,1132820,5 KMB,31,1287433,-6 Average,38,1351178,0.7 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 38 hedge funds with bullish positions and the average amount invested in these stocks was $1351 million. That figure was $3069 million in MAR's case. Freeport-McMoRan Inc. (NYSE:FCX) is the most popular stock in this table. On the other hand ING Groep N.V. (NYSE:ING) is the least popular one with only 10 bullish hedge fund positions. Marriott International Inc (NASDAQ: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 76.4. 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. This is a slightly positive signal but we'd rather spend our time researching stocks that hedge funds are piling on. 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 17.2% in 2021 through June 11th and beat the market again by 3.3 percentage points. Unfortunately MAR wasn't nearly as popular as these 5 stocks and hedge funds that were betting on MAR were disappointed as the stock returned -3.1% since the end of March (through 6/11) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 5 most popular stocks among hedge funds as many of these stocks already outperformed the market since 2019.
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Disclosure: None. This article was originally published at Insider Monkey.