Is Oracle Corporation (NYSE:ORCL) a good bet right now? We like to analyze hedge fund sentiment before doing 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 (for some reason media paid a ton of attention to Ackman’s gigantic JC Penney and Valeant failures) 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 Oracle Corporation the right investment to pursue these days? The best stock pickers are taking a slightly bearish view. The number of bullish hedge fund bets decreased by 1 in recent months. ORCL was in 57 hedge funds’ portfolios at the end of the third quarter of 2015. There were 58 hedge funds in our database with ORCL holdings at the end of the previous quarter. The level and the change in hedge fund popularity aren’t the only variables you need to analyze to decipher hedge funds’ perspectives. A stock may witness a boost in popularity, but it may still be less popular than similarly priced stocks. That’s why at the end of this article we will examine companies such as Visa Inc (NYSE:V), Royal Dutch Shell plc (ADR) (NYSE:RDS), and Citigroup Inc. (NYSE:C) to gather more data points.
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If you’d ask most market participants, hedge funds are viewed as slow, outdated financial tools of the past. While there are more than 8000 funds trading at present, Our researchers choose to focus on the top tier of this club, approximately 700 funds. These money managers preside over most of the smart money’s total capital, and by tailing their best stock picks, Insider Monkey has identified many investment strategies that have historically surpassed the market. Insider Monkey’s small-cap hedge fund strategy outpaced the S&P 500 index by 12 percentage points per annum for a decade in their back tests.
Keeping this in mind, we’re going to go over the latest action surrounding Oracle Corporation (NYSE:ORCL).
How are hedge funds trading Oracle Corporation (NYSE:ORCL)?
At the end of the third quarter, a total of 57 of the hedge funds tracked by Insider Monkey were long this stock, a change of -2% from the second quarter. With hedgies’ positions undergoing their usual ebb and flow, there exists a select group of noteworthy hedge fund managers who were upping their holdings substantially (or already accumulated large positions).
According to Insider Monkey’s hedge fund database, Eagle Capital Management, managed by Boykin Curry, holds the largest position in Oracle Corporation (NYSE:ORCL). Eagle Capital Management has a $1.575 billion position in the stock, comprising 6.9% of its 13F portfolio. Coming in second is Yacktman Asset Management, managed by Donald Yacktman, which holds a $952.1 million position; 6.2% of its 13F portfolio is allocated to the company. The remaining members of the smart money with similar optimism consist of Robert Rodriguez and Steven Romick’s First Pacific Advisors LLC, Ken Fisher’s Fisher Asset Management and Richard S. Pzena’s Pzena Investment Management.
Since Oracle Corporation (NYSE:ORCL) has faced falling interest from the aggregate hedge fund industry, we can see that there lies a certain “tier” of fund managers that elected to cut their entire stakes in the third quarter. At the top of the heap, Daniel S. Och’s OZ Management dropped the largest position of the 700 funds watched by Insider Monkey, worth close to $84.6 million in stock, and Jonathan Bloomberg’s BloombergSen was right behind this move, as the fund dropped about $73 million worth of shares.
Let’s go over hedge fund activity in other stocks – not necessarily in the same industry as Oracle Corporation (NYSE:ORCL) but similarly valued. These stocks are Visa Inc (NYSE:V), Royal Dutch Shell plc (ADR) (NYSE:RDS), Citigroup Inc. (NYSE:C), and Chevron Corporation (NYSE:CVX). This group of stocks’ market caps are similar to ORCL’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| V | 102 | 8569795 | 4 |
| RDS | 34 | 873203 | -5 |
| C | 121 | 10325538 | -5 |
| CVX | 45 | 1727357 | -5 |
As you can see these stocks had an average of 76 hedge funds with bullish positions and the average amount invested in these stocks was $5.37 billion, while in ORCL, hedge funds have amassed positions valued at $7.27 billion in aggregate. Citigroup Inc. (NYSE:C) is the most popular stock in this table. On the other hand Royal Dutch Shell plc (ADR) (NYSE:RDS) is the least popular one with only 34 bullish hedge fund positions. Oracle Corporation (NYSE:ORCL) is not the least popular stock in this group, but hedge fund interest is still below average. This is a slightly negative signal and we’d rather spend our time researching stocks that hedge funds are piling on. In this regard C might be a better candidate to consider a long position.
