While the market driven by short-term sentiment influenced by the accommodative interest rate environment in the US, virus news and stimulus spending, many smart money investors are starting to get cautious towards the current bull run since March, 2020 and hedging or reducing many of their long positions. Some fund managers are betting on Dow hitting 40,000 to generate strong returns. However, as we know, big investors usually buy stocks with strong fundamentals that can deliver gains both in bull and bear markets, which is why we believe we can profit from imitating them. In this article, we are going to take a look at the smart money sentiment surrounding Marriott International Inc (NASDAQ:MAR).
Marriott International Inc (NASDAQ:MAR) investors should be aware of a decrease in hedge fund sentiment of late. Marriott International Inc (NASDAQ:MAR) was in 49 hedge funds’ portfolios at the end of the second quarter of 2021. The all time high for this statistic is 58. There were 58 hedge funds in our database with MAR holdings at the end of March. Our calculations also showed that MAR isn’t among the 30 most popular stocks among hedge funds (click for Q2 rankings).
Why do we pay any attention at all to hedge fund sentiment? Our research has shown that a select group of hedge fund holdings outperformed the S&P 500 ETFs by 79 percentage points since March 2017 (see the details here). That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
Steven Cohen of Point72 Asset 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. Keeping this in mind let’s take a look at the latest hedge fund action encompassing Marriott International Inc (NASDAQ:MAR).
Do Hedge Funds Think MAR Is A Good Stock To Buy Now?
At the end of the second quarter, a total of 49 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -16% from the first quarter of 2020. The graph below displays the number of hedge funds with bullish position in MAR over the last 24 quarters. So, let’s see which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
More specifically, Eagle Capital Management was the largest shareholder of Marriott International Inc (NASDAQ:MAR), with a stake worth $1357 million reported as of the end of June. Trailing Eagle Capital Management was Broad Peak Investment Holdings, which amassed a stake valued at $152.8 million. First Pacific Advisors LLC, XN Exponent Advisors, and Citadel Investment Group 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 Broad Peak Investment Holdings allocated the biggest weight to Marriott International Inc (NASDAQ:MAR), around 12.22% of its 13F portfolio. Proem Advisors is also relatively very bullish on the stock, designating 10.45 percent of its 13F equity portfolio to MAR.
Due to the fact that Marriott International Inc (NASDAQ:MAR) has faced falling interest from the aggregate hedge fund industry, we can see that there is a sect of hedge funds who sold off their entire stakes heading into Q3. Interestingly, Renaissance Technologies dumped the largest investment of the 750 funds monitored by Insider Monkey, comprising close to $44.9 million in stock. Daniel S. Och’s fund, OZ Management, also sold off its stock, about $29.9 million worth. These transactions are important to note, as total hedge fund interest fell by 9 funds heading into Q3.
Let’s now take a look at hedge fund activity in other stocks similar to Marriott International Inc (NASDAQ:MAR). We will take a look at L3Harris Technologies, Inc. (NYSE:LHX), Ross Stores, Inc. (NASDAQ:ROST), Trane Technologies plc (NYSE:TT), MSCI Inc (NYSE:MSCI), Chipotle Mexican Grill, Inc. (NYSE:CMG), Eni SpA (NYSE:E), and Exelon Corporation (NASDAQ:EXC). This group of stocks’ market valuations resemble MAR’s market valuation.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| LHX | 42 | 1016540 | 1 |
| ROST | 51 | 1448653 | 3 |
| TT | 37 | 1250491 | 2 |
| MSCI | 37 | 772551 | -1 |
| CMG | 35 | 3204586 | -6 |
| E | 3 | 69407 | -1 |
| EXC | 35 | 1194570 | -9 |
| Average | 34.3 | 1279543 | -1.6 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 34.3 hedge funds with bullish positions and the average amount invested in these stocks was $1280 million. That figure was $2454 million in MAR’s case. Ross Stores, Inc. (NASDAQ:ROST) is the most popular stock in this table. On the other hand Eni SpA (NYSE:E) is the least popular one with only 3 bullish hedge fund positions. Marriott International Inc (NASDAQ:MAR) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for MAR is 69.3. 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. Hedge funds were also right about betting on MAR as the stock returned 14.2% since the end of Q2 (through 10/1) and outperformed the market. Hedge funds were rewarded for their relative bullishness.
Follow Marriott International Inc (NASDAQ:MAR)
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Disclosure: None. This article was originally published at Insider Monkey.
