We at Insider Monkey have gone over 752 13F filings that hedge funds and prominent investors are required to file by the SEC The 13F filings show the funds’ and investors’ portfolio positions as of September 30th. In this article, we look at what those funds think of Moody’s Corporation (NYSE:MCO) based on that data.
Is Moody’s Corporation (NYSE:MCO) going to take off soon? Prominent investors are taking a bullish view. The number of bullish hedge fund bets advanced by 9 recently. Our calculations also showed that MCO isn’t among the 30 most popular stocks among hedge funds.
In the financial world there are a large number of tools investors have at their disposal to grade stocks. A pair of the most under-the-radar tools are hedge fund and insider trading indicators. We have shown that, historically, those who follow the top picks of the best fund managers can outperform the broader indices by a solid amount. Insider Monkey’s flagship best performing hedge funds strategy returned 91% since May 2014 and outperformed the Russell 2000 ETFs by nearly 40 percentage points. Our short strategy outperformed the S&P 500 short ETFs by 20 percentage points annually (see the details here). That’s why we believe hedge fund sentiment is a useful indicator that investors should pay attention to.
Warren Buffett of Berkshire Hathaway
Unlike the largest US hedge funds that are convinced Dow will soar past 40,000 or the world’s most bearish hedge fund that’s more convinced than ever that a crash is coming, our long-short investment strategy doesn’t rely on bull or bear markets to deliver double digit returns. We only rely on the best performing hedge funds‘ buy/sell signals. We’re going to take a look at the recent hedge fund action encompassing Moody’s Corporation (NYSE:MCO).
How are hedge funds trading Moody’s Corporation (NYSE:MCO)?
Heading into the fourth quarter of 2019, a total of 48 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 23% from the previous quarter. Below, you can check out the change in hedge fund sentiment towards MCO over the last 17 quarters. So, let’s check out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
The largest stake in Moody’s Corporation (NYSE:MCO) was held by Berkshire Hathaway, which reported holding $5053.1 million worth of stock at the end of September. It was followed by Akre Capital Management with a $1163.8 million position. Other investors bullish on the company included Windacre Partnership, AltaRock Partners, and Millennium Management. In terms of the portfolio weights assigned to each position Valley Forge Capital allocated the biggest weight to Moody’s Corporation (NYSE:MCO), around 20.43% of its portfolio. AltaRock Partners is also relatively very bullish on the stock, setting aside 18.64 percent of its 13F equity portfolio to MCO.
As industrywide interest jumped, specific money managers have jumped into Moody’s Corporation (NYSE:MCO) headfirst. Atalan Capital, managed by David Thomas, created the most valuable position in Moody’s Corporation (NYSE:MCO). Atalan Capital had $79.9 million invested in the company at the end of the quarter. Renaissance Technologies also made a $39.1 million investment in the stock during the quarter. The other funds with brand new MCO positions are David Harding’s Winton Capital Management, Steve Cohen’s Point72 Asset Management, and Minhua Zhang’s Weld Capital Management.
Let’s now review hedge fund activity in other stocks – not necessarily in the same industry as Moody’s Corporation (NYSE:MCO) but similarly valued. We will take a look at AFLAC Incorporated (NYSE:AFL), The Travelers Companies Inc (NYSE:TRV), Ferrari N.V. (NYSE:RACE), and Keurig Dr Pepper Inc. (NYSE:KDP). This group of stocks’ market values match MCO’s market value.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| AFL | 27 | 528066 | 4 |
| TRV | 34 | 1514479 | 8 |
| RACE | 32 | 1530799 | 2 |
| KDP | 20 | 669516 | -1 |
| Average | 28.25 | 1060715 | 3.25 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 28.25 hedge funds with bullish positions and the average amount invested in these stocks was $1061 million. That figure was $7835 million in MCO’s case. The Travelers Companies Inc (NYSE:TRV) is the most popular stock in this table. On the other hand Keurig Dr Pepper Inc. (NYSE:KDP) is the least popular one with only 20 bullish hedge fund positions. Compared to these stocks Moody’s Corporation (NYSE:MCO) is more popular among hedge funds. Our calculations showed that top 20 most popular stocks among hedge funds returned 34.7% in 2019 through November 22nd and outperformed the S&P 500 ETF (SPY) by 8.5 percentage points. Hedge funds were also right about betting on MCO as the stock returned 9.1% during Q4 (through 11/22) and outperformed the market by an even larger margin. Hedge funds were clearly right about piling into this stock relative to other stocks with similar market capitalizations.
Disclosure: None. This article was originally published at Insider Monkey.
