Coronavirus is probably the #1 concern in investors’ minds right now. It should be. On February 27th we published an article with the title Recession is Imminent: We Need A Travel Ban NOW. We predicted that a US recession is imminent and US stocks will go down by at least 20% in the next 3-6 months. We also told you to short the market ETFs and buy long-term bonds. Investors who agreed with us and replicated these trades are up double digits whereas the market is down double digits. Our article also called for a total international travel ban to prevent the spread of the coronavirus especially from Europe. We were one step ahead of the markets and the president.
In these volatile markets we scrutinize hedge fund filings to get a reading on which direction each stock might be going. A whopping number of 13F filings filed with U.S. Securities and Exchange Commission has been processed by Insider Monkey so that individual investors can look at the overall hedge fund sentiment towards the stocks included in their watchlists. These freshly-submitted public filings disclose money managers’ equity positions as of the end of the three-month period that ended December 31, so let’s proceed with the discussion of the hedge fund sentiment on Marriott International Inc (NYSE:MAR).
Marriott International Inc (NYSE:MAR) was in 37 hedge funds’ portfolios at the end of December. MAR investors should be aware of a decrease in support from the world’s most elite money managers of late. There were 45 hedge funds in our database with MAR holdings at the end of the previous quarter. Our calculations also showed that MAR isn’t among the 30 most popular stocks among hedge funds (click for Q4 rankings and see the video below for Q3 rankings).
Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.
To most stock holders, hedge funds are assumed to be unimportant, old investment vehicles of yesteryear. While there are more than 8000 funds with their doors open today, Our researchers hone in on the masters of this group, about 850 funds. Most estimates calculate that this group of people watch over the majority of the smart money’s total capital, and by monitoring their matchless picks, Insider Monkey has come up with various investment strategies that have historically surpassed Mr. Market. Insider Monkey’s flagship short hedge fund strategy outpaced the S&P 500 short ETFs by around 20 percentage points annually since its inception in March 2017. Our portfolio of short stocks lost 35.3% since February 2017 (through March 3rd) even though the market was up more than 35% during the same period. We just shared a list of 7 short targets in our latest quarterly update .
Boykin Curry of Eagle Capital
We leave no stone unturned when looking for the next great investment idea. For example Europe is set to become the world’s largest cannabis market, so we check out this European marijuana stock pitch. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences, and and go through short-term trade recommendations like this one. We even check out the recommendations of services with hard to believe track records. In January, we recommended a long position in one of the most shorted stocks in the market, and that stock returned more than 50% despite the large losses in the market since our recommendation. Keeping this in mind let’s check out the latest hedge fund action surrounding Marriott International Inc (NYSE:MAR).
How have hedgies been trading Marriott International Inc (NYSE:MAR)?
Heading into the first quarter of 2020, a total of 37 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -18% from the third quarter of 2019. By comparison, 32 hedge funds held shares or bullish call options in MAR a year ago. With hedgies’ positions undergoing their usual ebb and flow, there exists a select group of key hedge fund managers who were boosting 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 $1426 million reported as of the end of September. Trailing Eagle Capital Management was Soroban Capital Partners, which amassed a stake valued at $685.7 million. Markel Gayner Asset Management, Citadel Investment Group, and Soroban Capital 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 Soroban Capital Partners allocated the biggest weight to Marriott International Inc (NYSE:MAR), around 8.99% of its 13F portfolio. Steel Canyon Capital is also relatively very bullish on the stock, dishing out 5.73 percent of its 13F equity portfolio to MAR.
Judging by the fact that Marriott International Inc (NYSE:MAR) has experienced declining sentiment from hedge fund managers, it’s easy to see that there were a few funds who were dropping their full holdings heading into Q4. It’s worth mentioning that Nicolai Tangen’s Ako Capital cut the biggest stake of all the hedgies watched by Insider Monkey, valued at an estimated $155.9 million in stock. Israel Englander’s fund, Millennium Management, also said goodbye to its stock, about $64.6 million worth. These transactions are interesting, as total hedge fund interest fell by 8 funds heading into Q4.
Let’s go over hedge fund activity in other stocks similar to Marriott International Inc (NYSE:MAR). These stocks are Phillips 66 (NYSE:PSX), Relx PLC (NYSE:RELX), ICICI Bank Limited (NYSE:IBN), and Illumina, Inc. (NASDAQ:ILMN). This group of stocks’ market values match MAR’s market value.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| PSX | 46 | 944856 | 10 |
| RELX | 7 | 99457 | 1 |
| IBN | 29 | 1107865 | 1 |
| ILMN | 43 | 1121339 | 3 |
| Average | 31.25 | 818379 | 3.75 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 31.25 hedge funds with bullish positions and the average amount invested in these stocks was $818 million. That figure was $2944 million in MAR’s case. Phillips 66 (NYSE:PSX) is the most popular stock in this table. On the other hand Relx PLC (NYSE:RELX) is the least popular one with only 7 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. 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 20 most popular stocks among hedge funds returned 41.3% in 2019 and outperformed the S&P 500 ETF (SPY) by 10.1 percentage points. These stocks lost 11.7% in 2020 through March 11th but beat the market by 3.1 percentage points. Unfortunately MAR wasn’t nearly as popular as these 20 stocks and hedge funds that were betting on MAR were disappointed as the stock returned -33.6% during the same time period and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 20 most popular stocks among hedge funds as many of these stocks already outperformed the market so far this year.
Disclosure: None. This article was originally published at Insider Monkey.
