Is MLM Stock A Buy or Sell?

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. We at Insider Monkey have plowed through 887 13F filings that hedge funds and well-known value investors are required to file by the SEC. The 13F filings show the funds’ and investors’ portfolio positions as of December 31st. In this article we look at what those investors think of Martin Marietta Materials, Inc. (NYSE:MLM).

Is MLM stock a buy or sell? Martin Marietta Materials, Inc. (NYSE:MLM) was in 41 hedge funds’ portfolios at the end of the fourth quarter of 2020. The all time high for this statistic is 52. MLM investors should be aware of an increase in hedge fund interest lately. There were 38 hedge funds in our database with MLM holdings at the end of September. Our calculations also showed that MLM isn’t among the 30 most popular stocks among hedge funds (click for Q4 rankings).

So, why do we pay attention to hedge fund sentiment before making any investment decisions? 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 more than 124 percentage points since March 2017 (see the details here).

John Armitage of Egerton Capital

At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, the House passed a landmark bill decriminalizing marijuana. So, we are checking out this under the radar cannabis stock right now. We go through lists like the 10 best battery stocks to buy to identify the next stock with 10x upside potential. Even though we recommend positions in only a tiny fraction of the companies we analyze, we check out as many stocks as we can. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. You can subscribe to our free daily newsletter on our website. With all of this in mind we’re going to check out the latest hedge fund action encompassing Martin Marietta Materials, Inc. (NYSE:MLM).

Do Hedge Funds Think MLM Is A Good Stock To Buy Now?

Heading into the first quarter of 2021, a total of 41 of the hedge funds tracked by Insider Monkey were long this stock, a change of 8% from the third quarter of 2020. The graph below displays the number of hedge funds with bullish position in MLM over the last 22 quarters. So, let’s examine which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

More specifically, Select Equity Group was the largest shareholder of Martin Marietta Materials, Inc. (NYSE:MLM), with a stake worth $1001.6 million reported as of the end of December. Trailing Select Equity Group was Gardner Russo & Gardner, which amassed a stake valued at $396.4 million. Egerton Capital Limited, Nitorum Capital, and Alkeon Capital Management 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 Select Equity Group allocated the biggest weight to Martin Marietta Materials, Inc. (NYSE:MLM), around 4.11% of its 13F portfolio. Nitorum Capital is also relatively very bullish on the stock, dishing out 4.03 percent of its 13F equity portfolio to MLM.

Consequently, key hedge funds have been driving this bullishness. Intrinsic Edge Capital, managed by Mark Coe, assembled the most outsized position in Martin Marietta Materials, Inc. (NYSE:MLM). Intrinsic Edge Capital had $9.1 million invested in the company at the end of the quarter. Ryan Tolkin (CIO)’s Schonfeld Strategic Advisors also made a $6.2 million investment in the stock during the quarter. The following funds were also among the new MLM investors: Michael Gelband’s ExodusPoint Capital, Eduardo Abush’s Waterfront Capital Partners, and Benjamin A. Smith’s Laurion Capital Management.

Let’s go over hedge fund activity in other stocks similar to Martin Marietta Materials, Inc. (NYSE:MLM). We will take a look at NovoCure Limited (NASDAQ:NVCR), Tyler Technologies, Inc. (NYSE:TYL), Hartford Financial Services Group Inc (NYSE:HIG), NICE Ltd (NASDAQ:NICE), GDS Holdings Limited (NASDAQ:GDS), Ubiquiti Inc. (NYSE:UI), and CMS Energy Corporation (NYSE:CMS). This group of stocks’ market valuations match MLM’s market valuation.

View table here if you experience formatting issues.

As you can see these stocks had an average of 28.3 hedge funds with bullish positions and the average amount invested in these stocks was $1010 million. That figure was $2011 million in MLM’s case. GDS Holdings Limited (NASDAQ:GDS) is the most popular stock in this table. On the other hand Ubiquiti Inc. (NYSE:UI) is the least popular one with only 19 bullish hedge fund positions. Compared to these stocks Martin Marietta Materials, Inc. (NYSE:MLM) is more popular among hedge funds. Our overall hedge fund sentiment score for MLM is 81.7. 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 30 most popular stocks among hedge funds returned 81.2% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 26 percentage points. These stocks returned 5.3% in 2021 through March 19th but still managed to beat the market by 0.8 percentage points. Hedge funds were also right about betting on MLM as the stock returned 17.1% since the end of December (through 3/19) 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.

Follow Insider Monkey on Twitter