Hedge funds run by legendary names like Nelson Peltz and David Tepper make billions of dollars a year for themselves and their super-rich accredited investors (you’ve got to have a minimum of $1 million liquid to invest in a hedge fund) by spending enormous resources on analyzing and uncovering data about small-cap stocks that the big brokerage houses don’t follow. Small caps are where they can generate significant out-performance. These stocks have been on a tear since the end of June, outperforming large-cap index funds by more than 10 percentage points. That’s why we pay special attention to hedge fund activity in these stocks.
In this article, we are going to take a closer look at the hedge fund sentiment towards Oracle Corporation (NASDAQ:ORCL). At the end of September, there were 56 funds from our database holding shares of the company, up by three from the end of the previous quarter. However, to get a better sense of its popularity, we will compare Oracle to other stocks including Fomento Economico Mexicano SAB (ADR) (NYSE:FMX), Visa Inc (NYSE:V), and Merck & Co., Inc. (NYSE:MRK) at the end of this article.
Follow Oracle Corp (NYSE:ORCL)
Follow Oracle Corp (NYSE:ORCL)
At Insider Monkey, we’ve developed an investment strategy that has delivered market-beating returns over the past 12 months. Our strategy identifies the 100 best-performing funds of the previous quarter from among the collection of 700+ successful funds that we track in our database, which we accomplish using our returns methodology. We then study the portfolios of those 100 funds using the latest 13F data to uncover the 30 most popular mid-cap stocks (market caps of between $1 billion and $10 billion) among them to hold until the next filing period. This strategy delivered 18% gains over the past 12 months, more than doubling the 8% returns enjoyed by the S&P 500 ETFs.
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With all of this in mind, let’s take a look at the recent action surrounding Oracle Corporation (NASDAQ:ORCL).
How have hedgies been trading Oracle Corporation (NASDAQ:ORCL)?
As stated earlier, at the end of the third quarter, 56 funds tracked by Insider Monkey were bullish on Oracle Corporation, an increase of 6% from one quarter earlier. With the smart money’s capital changing hands, there exists a few noteworthy hedge fund managers who were boosting their stakes substantially (or already accumulated large positions).
Of the funds tracked by Insider Monkey, Boykin Curry’s Eagle Capital Management has the biggest position in Oracle Corporation (NASDAQ:ORCL), worth close to $1.6789 billion, comprising 7.2% of its total 13F portfolio. Coming in second is First Pacific Advisors LLC, managed by Robert Rodriguez and Steven Romick, which holds a $858.9 million position; the fund has 7.1% of its 13F portfolio invested in the stock. Some other professional money managers with similar optimism consist of Donald Yacktman’s Yacktman Asset Management, Ken Fisher’s Fisher Asset Management, and Richard S. Pzena’s Pzena Investment Management.
Consequently, some big names were breaking ground themselves. Citadel Investment Group, led by Ken Griffin, assembled the largest call position in Oracle Corporation (NASDAQ:ORCL). Citadel Investment Group had $40.8 million invested in the company at the end of the quarter. Glenn Russell Dubin’s Highbridge Capital Management also made a $30.4 million investment in the stock during the quarter. The following funds were also among the new ORCL investors: Larry Petrella and Michael Siminerio’s PineView Asset Management, Paul Marshall and Ian Wace’s Marshall Wace LLP, and Ben Levine, Andrew Manuel and Stefan Renold’s LMR Partners.
Let’s check out hedge fund activity in other stocks similar to Oracle Corporation (NASDAQ:ORCL). We will take a look at Fomento Economico Mexicano SAB (ADR) (NYSE:FMX), Visa Inc (NYSE:V), Merck & Co., Inc. (NYSE:MRK), and The Home Depot, Inc. (NYSE:HD). This group of stocks’ market valuations are closest to ORCL’s market valuation.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| FMX | 16 | 207760 | 1 |
| V | 115 | 10263707 | -3 |
| MRK | 84 | 3849838 | 18 |
| HD | 72 | 4308946 | 5 |
As you can see these stocks had an average of 72 investors holding shares and the average amount invested in these stocks was $4.66 billion. That figure was $5.84 billion in Oracle’s case. Visa Inc (NYSE:V) is the most popular stock in this table with 115 funds holding shares as of the end of September. On the other hand Fomento Economico Mexicano SAB (ADR) (NYSE:FMX) is the least popular one with only 16 bullish hedge fund positions. Oracle Corporation (NASDAQ:ORCL) is not the least popular stock in this group but hedge fund interest is still below average. This is a slightly negative signal and we’d rather spend our time researching stocks that hedge funds are piling on. In this regard Visa Inc (NYSE:V) might be a better candidate to consider a long position.
