We hate to say this but, we told you so. On February 27th we published an article with the title Recession is Imminent: We Need A Travel Ban NOW and predicted a US recession when the S&P 500 Index was trading at the 3150 level. We also told you to short the market and buy long-term Treasury bonds. Our article also called for a total international travel ban. While we were warning you, President Trump minimized the threat and failed to act promptly. As a result of his inaction, we will now experience a deeper recession (read our latest 10 coronavirus predictions).
In these volatile markets we scrutinize hedge fund filings to get a reading on which direction each stock might be going. The latest 13F reporting period has come and gone, and Insider Monkey is again at the forefront when it comes to making use of this gold mine of data. Insider Monkey finished processing 835 13F filings submitted by hedge funds and prominent investors. These filings show these funds’ portfolio positions as of December 31st, 2019. 0
Markel Corporation (NYSE:MKL) was in 37 hedge funds’ portfolios at the end of the fourth quarter of 2019. MKL has seen an increase in hedge fund sentiment of late. There were 31 hedge funds in our database with MKL holdings at the end of the previous quarter. Our calculations also showed that MKL isn’t among the 30 most popular stocks among hedge funds (click for Q4 rankings and see the video below for Q3 rankings).
If you’d ask most market participants, hedge funds are assumed to be unimportant, outdated financial vehicles of years past. While there are greater than 8000 funds in operation today, We look at the aristocrats of this club, around 850 funds. These investment experts have their hands on the lion’s share of all hedge funds’ total capital, and by following their unrivaled equity investments, Insider Monkey has brought to light many investment strategies that have historically exceeded the market. Insider Monkey’s flagship short hedge fund strategy beat 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 .
Paul Tudor Jones of Tudor Investment Corp
We leave no stone unturned when looking for the next great investment idea. For example we recently identified a stock that trades 25% below the net cash on its balance sheet. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences, and go through short-term trade recommendations like this one. We even check out the recommendations of services with hard to believe track records. Our best call in 2020 was shorting the market when S&P 500 was trading at 3150 after realizing the coronavirus pandemic’s significance before most investors. Keeping this in mind we’re going to review the new hedge fund action surrounding Markel Corporation (NYSE:MKL).
How are hedge funds trading Markel Corporation (NYSE:MKL)?
At the end of the fourth quarter, a total of 37 of the hedge funds tracked by Insider Monkey were long this stock, a change of 19% from the previous quarter. Below, you can check out the change in hedge fund sentiment towards MKL over the last 18 quarters. So, let’s examine which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
Of the funds tracked by Insider Monkey, Akre Capital Management, managed by Charles Akre, holds the biggest position in Markel Corporation (NYSE:MKL). Akre Capital Management has a $586.2 million position in the stock, comprising 5.4% of its 13F portfolio. The second largest stake is held by Renaissance Technologies, holding a $247.2 million position; 0.2% of its 13F portfolio is allocated to the company. Other members of the smart money that are bullish comprise Brian Ashford-Russell and Tim Woolley’s Polar Capital, Dmitry Balyasny’s Balyasny Asset Management and Robert Joseph Caruso’s Select Equity Group. In terms of the portfolio weights assigned to each position Akre Capital Management allocated the biggest weight to Markel Corporation (NYSE:MKL), around 5.38% of its 13F portfolio. Capital Returns Management is also relatively very bullish on the stock, setting aside 4.41 percent of its 13F equity portfolio to MKL.
As aggregate interest increased, key hedge funds have jumped into Markel Corporation (NYSE:MKL) headfirst. Gillson Capital, managed by Daniel Johnson, created the largest position in Markel Corporation (NYSE:MKL). Gillson Capital had $10.2 million invested in the company at the end of the quarter. Peter Muller’s PDT Partners also initiated a $1.1 million position during the quarter. The other funds with new positions in the stock are Ran Pang’s Quantamental Technologies, Paul Tudor Jones’s Tudor Investment Corp, and Paul Marshall and Ian Wace’s Marshall Wace LLP.
Let’s now take a look at hedge fund activity in other stocks – not necessarily in the same industry as Markel Corporation (NYSE:MKL) but similarly valued. We will take a look at The Cooper Companies, Inc. (NYSE:COO), Expedia Group, Inc. (NASDAQ:EXPE), Seagate Technology plc (NASDAQ:STX), and Loews Corporation (NYSE:L). All of these stocks’ market caps match MKL’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| COO | 28 | 764569 | -3 |
| EXPE | 59 | 3035242 | 22 |
| STX | 35 | 2826852 | 5 |
| L | 24 | 213525 | -6 |
| Average | 36.5 | 1710047 | 4.5 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 36.5 hedge funds with bullish positions and the average amount invested in these stocks was $1710 million. That figure was $1410 million in MKL’s case. Expedia Group, Inc.(NASDAQ:EXPE) is the most popular stock in this table. On the other hand Loews Corporation (NYSE:L) is the least popular one with only 24 bullish hedge fund positions. Markel Corporation (NYSE:MKL) 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 22.3% in 2020 through March 16th but beat the market by 3.2 percentage points. Unfortunately MKL wasn’t nearly as popular as these 20 stocks and hedge funds that were betting on MKL were disappointed as the stock returned -26.6% 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.
Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.
Disclosure: None. This article was originally published at Insider Monkey.
