In this article we will analyze whether Oracle Corporation (NYSE:ORCL) is a good investment right now by following the lead of some of the best investors in the world and piggybacking their ideas. There’s no better way to get these firms’ immense resources and analytical capabilities working for us than to follow their lead into their best ideas. While not all of these picks will be winners, our research shows that these picks historically outperformed the market by double digits annually.
Oracle Corporation (NYSE:ORCL) was in 55 hedge funds’ portfolios at the end of the second quarter of 2021. The all time high for this statistic is 74. ORCL investors should be aware of an increase in hedge fund sentiment recently. There were 52 hedge funds in our database with ORCL positions at the end of the first quarter. Our calculations also showed that ORCL isn’t among the 30 most popular stocks among hedge funds (click for Q2 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 79 percentage points since March 2017 (see the details here). We have been able to outperform the passive index funds by tracking the moves of corporate insiders and hedge funds, and we believe small investors can benefit a lot from reading hedge fund investor letters and 13F filings.
Richard S. Pzena of Pzena Investment Management
At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, lithium mining is one of the fastest growing industries right now, so we are checking out stock pitches like this emerging lithium stock. We go through lists like the 10 best EV stocks to pick the next Tesla that will deliver a 10x return. 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 homepage. With all of this in mind let’s take a glance at the new hedge fund action surrounding Oracle Corporation (NYSE:ORCL).
Do Hedge Funds Think ORCL Is A Good Stock To Buy Now?
At Q2’s end, a total of 55 of the hedge funds tracked by Insider Monkey were long this stock, a change of 6% from one quarter earlier. Below, you can check out the change in hedge fund sentiment towards ORCL over the last 24 quarters. With the smart money’s positions undergoing their usual ebb and flow, there exists a select group of noteworthy hedge fund managers who were boosting their stakes substantially (or already accumulated large positions).
More specifically, Fisher Asset Management was the largest shareholder of Oracle Corporation (NYSE:ORCL), with a stake worth $1158.4 million reported as of the end of June. Trailing Fisher Asset Management was Arrowstreet Capital, which amassed a stake valued at $397 million. AQR Capital Management, Citadel Investment Group, and Pzena Investment 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 Key Square Capital Management allocated the biggest weight to Oracle Corporation (NYSE:ORCL), around 4.4% of its 13F portfolio. Antipodes Partners is also relatively very bullish on the stock, setting aside 2.64 percent of its 13F equity portfolio to ORCL.
Now, specific money managers have been driving this bullishness. Antipodes Partners, managed by Jacob Mitchell, created the biggest position in Oracle Corporation (NYSE:ORCL). Antipodes Partners had $73.2 million invested in the company at the end of the quarter. Scott Bessent’s Key Square Capital Management also initiated a $23.3 million position during the quarter. The following funds were also among the new ORCL investors: D. E. Shaw’s D E Shaw, Ryan Tolkin (CIO)’s Schonfeld Strategic Advisors, and Michael Gelband’s ExodusPoint Capital.
Let’s also examine hedge fund activity in other stocks – not necessarily in the same industry as Oracle Corporation (NYSE:ORCL) but similarly valued. These stocks are Abbott Laboratories (NYSE:ABT), AT&T Inc. (NYSE:T), Novartis AG (NYSE:NVS), PepsiCo, Inc. (NASDAQ:PEP), Chevron Corporation (NYSE:CVX), AbbVie Inc (NYSE:ABBV), and Thermo Fisher Scientific Inc. (NYSE:TMO). All of these stocks’ market caps match ORCL’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| ABT | 61 | 4367607 | -4 |
| T | 68 | 2896412 | 5 |
| NVS | 22 | 1798368 | 3 |
| PEP | 66 | 5193638 | 5 |
| CVX | 50 | 4272637 | 9 |
| ABBV | 82 | 5351277 | 10 |
| TMO | 87 | 7391464 | 8 |
| Average | 62.3 | 4467343 | 5.1 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 62.3 hedge funds with bullish positions and the average amount invested in these stocks was $4467 million. That figure was $2890 million in ORCL’s case. Thermo Fisher Scientific Inc. (NYSE:TMO) is the most popular stock in this table. On the other hand Novartis AG (NYSE:NVS) is the least popular one with only 22 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. Our overall hedge fund sentiment score for ORCL is 55.7. 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 5 most popular stocks among hedge funds returned 95.8% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 40 percentage points. These stocks gained 22.9% in 2021 through October 1st and still beat the market by 5.6 percentage points. A small number of hedge funds were also right about betting on ORCL as the stock returned 15.7% since the end of the second quarter (through 10/1) and outperformed the market by an even larger margin.
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Disclosure: None. This article was originally published at Insider Monkey.
