How do you pick the next stock to invest in? One way would be to spend days of research browsing through thousands of publicly traded companies. However, an easier way is to look at the stocks that smart money investors are collectively bullish on. Hedge funds and other institutional investors usually invest large amounts of capital and have to conduct due diligence while choosing their next pick. They don’t always get it right, but, on average, their stock picks historically generated strong returns after adjusting for known risk factors. With this in mind, let’s take a look at the recent hedge fund activity surrounding Markel Corporation (NYSE:MKL) and determine whether hedge funds had an edge regarding this stock.
Markel Corporation (NYSE:MKL) was in 33 hedge funds’ portfolios at the end of June. The all time high for this statistics is 37. MKL investors should be aware of an increase in support from the world’s most elite money managers recently. There were 32 hedge funds in our database with MKL positions at the end of the first quarter. Our calculations also showed that MKL isn’t among the 30 most popular stocks among hedge funds (click for Q2 rankings and see the video for a quick look at the top 5 stocks).
Video: Watch our video about the top 5 most popular hedge fund stocks.
In today’s marketplace there are plenty of methods stock market investors put to use to grade publicly traded companies. A duo of the most innovative methods are hedge fund and insider trading moves. Our experts have shown that, historically, those who follow the best picks of the top hedge fund managers can beat their index-focused peers by a superb amount (see the details here).
Paul Marshall of Marshall Wace
At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, this “mom” trader turned $2000 into $2 million within 2 years. So, we are checking out her best trade idea of the month. Cannabis stocks are roaring back in 2020, which is why we are also checking out this under-the-radar stock. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. We go through lists like the 10 most profitable companies in the world to pick the best large-cap stocks to buy. Even though we recommend positions in only a tiny fraction of the companies we analyze, we check out as many stocks as we can. With all of this in mind let’s take a peek at the fresh hedge fund action encompassing Markel Corporation (NYSE:MKL).
How have hedgies been trading Markel Corporation (NYSE:MKL)?
At Q2’s end, a total of 33 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 3% from the first quarter of 2020. On the other hand, there were a total of 25 hedge funds with a bullish position in MKL a year ago. With hedge funds’ sentiment swirling, there exists an “upper tier” of key hedge fund managers who were boosting their stakes substantially (or already accumulated large positions).
According to publicly available hedge fund and institutional investor holdings data compiled by Insider Monkey, Charles Akre’s Akre Capital Management has the number one position in Markel Corporation (NYSE:MKL), worth close to $452.7 million, accounting for 3.4% of its total 13F portfolio. On Akre Capital Management’s heels is Renaissance Technologies, with a $174.8 million position; the fund has 0.2% of its 13F portfolio invested in the stock. Remaining members of the smart money with similar optimism contain Brian Ashford-Russell and Tim Woolley’s Polar Capital, Wallace Weitz’s Wallace R. Weitz & Co. and Francois Rochon’s Giverny Capital. In terms of the portfolio weights assigned to each position Giverny Capital allocated the biggest weight to Markel Corporation (NYSE:MKL), around 4.05% of its 13F portfolio. Akre Capital Management is also relatively very bullish on the stock, dishing out 3.41 percent of its 13F equity portfolio to MKL.
As one would reasonably expect, key money managers were breaking ground themselves. Select Equity Group, managed by Robert Joseph Caruso, assembled the largest position in Markel Corporation (NYSE:MKL). Select Equity Group had $6.3 million invested in the company at the end of the quarter. Paul Marshall and Ian Wace’s Marshall Wace LLP also initiated a $4.9 million position during the quarter. The following funds were also among the new MKL investors: Minhua Zhang’s Weld Capital Management, Parvinder Thiara’s Athanor Capital, and Paul Tudor Jones’s Tudor Investment Corp.
Let’s now take a look at hedge fund activity in other stocks similar to Markel Corporation (NYSE:MKL). We will take a look at SK Telecom Co., Ltd. (NYSE:SKM), Insulet Corporation (NASDAQ:PODD), J.B. Hunt Transport Services, Inc. (NASDAQ:JBHT), Expeditors International of Washington (NASDAQ:EXPD), Qorvo Inc (NASDAQ:QRVO), Etsy Inc (NASDAQ:ETSY), and Genuine Parts Company (NYSE:GPC). This group of stocks’ market caps are closest to MKL’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| SKM | 8 | 129598 | 3 |
| PODD | 44 | 985462 | 8 |
| JBHT | 24 | 215950 | -1 |
| EXPD | 33 | 443457 | 2 |
| QRVO | 51 | 1608774 | 12 |
| ETSY | 43 | 1727421 | 5 |
| GPC | 20 | 144284 | -2 |
| Average | 31.9 | 750707 | 3.9 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 31.9 hedge funds with bullish positions and the average amount invested in these stocks was $751 million. That figure was $944 million in MKL’s case. Qorvo Inc (NASDAQ:QRVO) is the most popular stock in this table. On the other hand SK Telecom Co., Ltd. (NYSE:SKM) is the least popular one with only 8 bullish hedge fund positions. Markel Corporation (NYSE:MKL) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for MKL is 61.8. 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 10 most popular stocks among hedge funds returned 41.4% in 2019 and outperformed the S&P 500 ETF (SPY) by 10.1 percentage points. These stocks gained 33% in 2020 through the end of August and still beat the market by 23.2 percentage points. Hedge funds were also right about betting on MKL, though not to the same extent, as the stock returned 17.7% since the end of June and outperformed the market as well.
Follow Markel Group Inc. (NYSE:MKL)
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Disclosure: None. This article was originally published at Insider Monkey.
