Is Murphy USA Inc. (NYSE:MUSA) a good place to invest some of your money right now? We can gain invaluable insight to help us answer that question by studying the investment trends of top investors, who employ world-class Ivy League graduates, who are given immense resources and industry contacts to put their financial expertise to work. The top picks of these firms have historically outperformed the market when we account for known risk factors, making them very valuable investment ideas.
Murphy USA Inc. (NYSE:MUSA) investors should pay attention to an increase in activity from the world’s largest hedge funds lately. MUSA was in 24 hedge funds’ portfolios at the end of the fourth quarter of 2018. There were 19 hedge funds in our database with MUSA positions at the end of the previous quarter. Our calculations also showed that MUSA isn’t among the 30 most popular stocks among hedge funds.
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’ large-cap stock picks indeed failed to beat the market between 1999 and 2016. However, we were able to identify in advance a select group of hedge fund holdings that outperformed the market by 32 percentage points since May 2014 through March 12, 2019 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that’ll significantly underperform the market. We have been tracking and sharing the list of these stocks since February 2017 and they lost 27.5% through March 12, 2019. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
Let’s review the latest hedge fund action surrounding Murphy USA Inc. (NYSE:MUSA).
Hedge fund activity in Murphy USA Inc. (NYSE:MUSA)
At Q4’s end, a total of 24 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 26% from the second quarter of 2018. By comparison, 14 hedge funds held shares or bullish call options in MUSA a year ago. So, let’s review which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
Among these funds, AQR Capital Management held the most valuable stake in Murphy USA Inc. (NYSE:MUSA), which was worth $54.9 million at the end of the third quarter. On the second spot was Arrowstreet Capital which amassed $16.8 million worth of shares. Moreover, GLG Partners, Two Sigma Advisors, and SG Capital Management were also bullish on Murphy USA Inc. (NYSE:MUSA), allocating a large percentage of their portfolios to this stock.
Consequently, key money managers were leading the bulls’ herd. SG Capital Management, managed by Ken Grossman and Glen Schneider, created the largest position in Murphy USA Inc. (NYSE:MUSA). SG Capital Management had $9.5 million invested in the company at the end of the quarter. Steve Cohen’s Point72 Asset Management also initiated a $4.7 million position during the quarter. The following funds were also among the new MUSA investors: John Tompkins’s Tyvor Capital, Jim Simons’s Renaissance Technologies, and Minhua Zhang’s Weld Capital Management.
Let’s go over hedge fund activity in other stocks – not necessarily in the same industry as Murphy USA Inc. (NYSE:MUSA) but similarly valued. We will take a look at Integer Holdings Corporation (NYSE:ITGR), Stantec Inc. (NYSE:STN), American States Water Co (NYSE:AWR), and Strategic Education, Inc. (NASDAQ:STRA). This group of stocks’ market values match MUSA’s market value.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| ITGR | 19 | 219474 | 2 |
| STN | 4 | 61347 | -1 |
| AWR | 12 | 67657 | 0 |
| STRA | 12 | 220516 | -3 |
| Average | 11.75 | 142249 | -0.5 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 11.75 hedge funds with bullish positions and the average amount invested in these stocks was $142 million. That figure was $150 million in MUSA’s case. Integer Holdings Corporation (NYSE:ITGR) is the most popular stock in this table. On the other hand Stantec Inc. (NYSE:STN) is the least popular one with only 4 bullish hedge fund positions. Compared to these stocks Murphy USA Inc. (NYSE:MUSA) is more popular among hedge funds. Our calculations showed that top 15 most popular stocks) among hedge funds returned 24.2% through April 22nd and outperformed the S&P 500 ETF (SPY) by more than 7 percentage points. Unfortunately MUSA wasn’t nearly as popular as these 15 stock and hedge funds that were betting on MUSA were disappointed as the stock returned 6.1% and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 15 most popular stocks) among hedge funds as 13 of these stocks already outperformed the market this year.
Disclosure: None. This article was originally published at Insider Monkey.
