In this article we are going to use hedge fund sentiment as a tool and determine whether Marathon Patent Group, Inc. (NASDAQ:MARA) is a good investment right now. We like to analyze hedge fund sentiment before conducting days of in-depth research. We do so because hedge funds and other elite investors have numerous Ivy League graduates, expert network advisers, and supply chain tipsters working or consulting for them. There is not a shortage of news stories covering failed hedge fund investments and it is a fact that hedge funds’ picks don’t beat the market 100% of the time, but their consensus picks have historically done very well and have outperformed the market after adjusting for risk.
Is Marathon Patent Group, Inc. (NASDAQ:MARA) a first-rate investment now? Prominent investors were getting more optimistic. The number of bullish hedge fund bets moved up by 9 in recent months. Marathon Patent Group, Inc. (NASDAQ:MARA) was in 19 hedge funds’ portfolios at the end of June. The all time high for this statistic was previously 10. This means the bullish number of hedge fund positions in this stock currently sits at its all time high. Our calculations also showed that MARA isn’t among the 30 most popular stocks among hedge funds (click for Q2 rankings). There were 10 hedge funds in our database with MARA positions at the end of the first quarter.
Hedge funds’ reputation as shrewd investors has been tarnished in the last decade as their hedged returns couldn’t keep up with the unhedged returns of the market indices. 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 79 percentage points since March 2017 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that underperformed the market by 10 percentage points annually between 2006 and 2017. Interestingly the margin of underperformance of these stocks has been increasing in recent years. Investors who are long the market and short these stocks would have returned more than 27% annually between 2015 and 2017. We have been tracking and sharing the list of these stocks since February 2017 in our quarterly newsletter.
Matthew Hulsizer of PEAK6 Capital
Now let’s take a look at the latest hedge fund action surrounding Marathon Patent Group, Inc. (NASDAQ:MARA).
Do Hedge Funds Think MARA Is A Good Stock To Buy Now?
Heading into the third quarter of 2021, a total of 19 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 90% from the previous quarter. Below, you can check out the change in hedge fund sentiment towards MARA over the last 24 quarters. With hedge funds’ positions undergoing their usual ebb and flow, there exists an “upper tier” of notable hedge fund managers who were increasing their stakes significantly (or already accumulated large positions).
According to publicly available hedge fund and institutional investor holdings data compiled by Insider Monkey, Ken Griffin’s Citadel Investment Group has the number one call position in Marathon Patent Group, Inc. (NASDAQ:MARA), worth close to $76.8 million, accounting for less than 0.1%% of its total 13F portfolio. Coming in second is Renaissance Technologies, with a $52.4 million position; the fund has 0.1% of its 13F portfolio invested in the stock. Some other professional money managers that are bullish encompass Jonathan Auerbach’s Hound Partners, and Kevin Cottrell and Chris LaSusa’s KCL Capital. In terms of the portfolio weights assigned to each position Bronson Point Partners allocated the biggest weight to Marathon Patent Group, Inc. (NASDAQ:MARA), around 2.88% of its 13F portfolio. Hound Partners is also relatively very bullish on the stock, designating 0.98 percent of its 13F equity portfolio to MARA.
Now, key hedge funds were leading the bulls’ herd. KCL Capital, managed by Kevin Cottrell and Chris LaSusa, created the most outsized position in Marathon Patent Group, Inc. (NASDAQ:MARA). KCL Capital had $5.5 million invested in the company at the end of the quarter. Larry Foley and Paul Farrell’s Bronson Point Partners also initiated a $5.3 million position during the quarter. The other funds with brand new MARA positions are David Rosen’s Rubric Capital Management, Michael Gelband’s ExodusPoint Capital, and John Petry’s Sessa Capital.
Let’s now take a look at hedge fund activity in other stocks – not necessarily in the same industry as Marathon Patent Group, Inc. (NASDAQ:MARA) but similarly valued. We will take a look at Cannae Holdings, Inc. (NYSE:CNNE), CNO Financial Group Inc (NYSE:CNO), Integer Holdings Corporation (NYSE:ITGR), GrafTech International Ltd. (NYSE:EAF), 2U Inc (NASDAQ:TWOU), Phreesia, Inc. (NYSE:PHR), and Pebblebrook Hotel Trust (NYSE:PEB). This group of stocks’ market values are similar to MARA’s market value.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| CNNE | 34 | 522342 | -2 |
| CNO | 21 | 363432 | 3 |
| ITGR | 23 | 200458 | 7 |
| EAF | 36 | 377086 | -2 |
| TWOU | 25 | 757888 | 2 |
| PHR | 26 | 226853 | -1 |
| PEB | 17 | 57810 | 7 |
| Average | 26 | 357981 | 2 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 26 hedge funds with bullish positions and the average amount invested in these stocks was $358 million. That figure was $109 million in MARA’s case. GrafTech International Ltd. (NYSE:EAF) is the most popular stock in this table. On the other hand Pebblebrook Hotel Trust (NYSE:PEB) is the least popular one with only 17 bullish hedge fund positions. Marathon Patent Group, Inc. (NASDAQ:MARA) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for MARA is 45.3. 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 24% in 2021 through October 22nd and still beat the market by 1.6 percentage points. A small number of hedge funds were also right about betting on MARA as the stock returned 57.7% since the end of the second quarter (through 10/22) and outperformed the market by an even larger margin.
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Disclosure: None. This article was originally published at Insider Monkey.
