Stocks, especially the once high flying technology stocks, had a lousy start to the new year. QQQ lost 9% of its value in January. We aren’t certain about the bubbly technology stocks that trade for ridiculously high multiples of their revenues, but we believe top hedge fund stocks will deliver positive returns for the rest of the year. In this article, we will take a closer look at hedge fund sentiment towards Marsh & McLennan Companies, Inc. (NYSE:MMC) at the end of the third quarter and determine whether the smart money was really smart about this stock.
Marsh & McLennan Companies, Inc. (NYSE:MMC) shareholders have witnessed an increase in hedge fund interest in recent months. Marsh & McLennan Companies, Inc. (NYSE:MMC) was in 42 hedge funds’ portfolios at the end of September. The all time high for this statistic is 43. Our calculations also showed that MMC isn’t among the 30 most popular stocks among hedge funds (click for Q3 rankings).
Michael Gelband of ExodusPoint Capital
At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, lithium prices have more than doubled over the past year, so we go through lists like the 10 best EV 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. Keeping this in mind let’s take a look at the recent hedge fund action encompassing Marsh & McLennan Companies, Inc. (NYSE:MMC).
Do Hedge Funds Think MMC Is A Good Stock To Buy Now?
At Q3’s end, a total of 42 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 2% from the previous quarter. On the other hand, there were a total of 35 hedge funds with a bullish position in MMC a year ago. With the smart money’s sentiment swirling, there exists a select group of noteworthy hedge fund managers who were increasing their stakes substantially (or already accumulated large positions).
More specifically, Berkshire Hathaway was the largest shareholder of Marsh & McLennan Companies, Inc. (NYSE:MMC), with a stake worth $415.2 million reported as of the end of September. Trailing Berkshire Hathaway was Arrowstreet Capital, which amassed a stake valued at $387.7 million. Polar Capital, Viking Global, and Intermede Investment Partners 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 3G Sahana Capital Management allocated the biggest weight to Marsh & McLennan Companies, Inc. (NYSE:MMC), around 8.95% of its 13F portfolio. Bishop Rock Capital is also relatively very bullish on the stock, setting aside 5.2 percent of its 13F equity portfolio to MMC.
As industrywide interest jumped, key money managers were breaking ground themselves. Tudor Investment Corp, managed by Paul Tudor Jones, established the largest position in Marsh & McLennan Companies, Inc. (NYSE:MMC). Tudor Investment Corp had $10.1 million invested in the company at the end of the quarter. Jinghua Yan’s TwinBeech Capital also initiated a $4.7 million position during the quarter. The other funds with new positions in the stock are Michael Gelband’s ExodusPoint Capital, Qing Li’s Sciencast Management, and Greg Poole’s Echo Street Capital Management.
Let’s now take a look at hedge fund activity in other stocks – not necessarily in the same industry as Marsh & McLennan Companies, Inc. (NYSE:MMC) but similarly valued. These stocks are General Motors Company (NYSE:GM), Fidelity National Information Services Inc. (NYSE:FIS), Duke Energy Corporation (NYSE:DUK), Crown Castle International Corp. (NYSE:CCI), Chubb Limited (NYSE:CB), The Bank of Nova Scotia (NYSE:BNS), and The Sherwin-Williams Company (NYSE:SHW). All of these stocks’ market caps are similar to MMC’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| GM | 77 | 6416552 | -9 |
| FIS | 69 | 6044245 | -3 |
| DUK | 32 | 687541 | -4 |
| CCI | 45 | 2089073 | 3 |
| CB | 30 | 1272774 | -12 |
| BNS | 17 | 193321 | 3 |
| SHW | 44 | 1576816 | -5 |
| Average | 44.9 | 2611475 | -3.9 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 44.9 hedge funds with bullish positions and the average amount invested in these stocks was $2611 million. That figure was $1987 million in MMC’s case. General Motors Company (NYSE:GM) is the most popular stock in this table. On the other hand The Bank of Nova Scotia (NYSE:BNS) is the least popular one with only 17 bullish hedge fund positions. Marsh & McLennan Companies, Inc. (NYSE:MMC) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for MMC is 56.1. 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 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 29.6% in 2021 and still managed to beat the market by another 3.6 percentage points. Hedge funds were somewhat right about betting on MMC as the stock returned 2.2% since the end of September (through January 31st) and outperformed the top 5 hedge fund stocks but not the market. This is a rare phenomenon as top hedge fund stocks usually beat the market over the long-term.
Follow Marsh & Mclennan Companies Inc. (NYSE:MMC)
Follow Marsh & Mclennan Companies Inc. (NYSE:MMC)
Suggested Articles:
- 10 Best SPACs to Buy According to David Einhorn’s Greenlight Capital
- 10 Largest Data Center Companies
- 10 Best 3D Printing Stocks to Buy Now
Disclosure: None. This article was originally published at Insider Monkey.
