Moody’s Corporation (MCO): Hedge Funds Are Snapping Up

The financial regulations require hedge funds and wealthy investors that exceeded the $100 million holdings threshold to file a report that shows their positions at the end of every quarter. Even though it isn’t the intention, these filings to a certain extent level the playing field for ordinary investors. The latest round of 13F filings disclosed the funds’ positions on September 30th. We at Insider Monkey have made an extensive database of more than 867 of those established hedge funds and famous value investors’ filings. In this article, we analyze how these elite funds and prominent investors traded Moody’s Corporation (NYSE:MCO) based on those filings.

Moody’s Corporation (NYSE:MCO) investors should be aware of an increase in hedge fund sentiment lately. Moody’s Corporation (NYSE:MCO) was in 58 hedge funds’ portfolios at the end of September. The all time high for this statistic is 61. There were 44 hedge funds in our database with MCO holdings at the end of June. Our calculations also showed that MCO isn’t among the 30 most popular stocks among hedge funds (click for Q3 rankings).

At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, lithium prices have more than doubled over the past year, so 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. Keeping this in mind let’s view the recent hedge fund action regarding Moody’s Corporation (NYSE:MCO).

Paul Tudor Jones of Tudor Investment Corp

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

At third quarter’s end, a total of 58 of the hedge funds tracked by Insider Monkey were long this stock, a change of 32% from the second quarter of 2021. On the other hand, there were a total of 60 hedge funds with a bullish position in MCO a year ago. With hedgies’ sentiment swirling, there exists a few noteworthy hedge fund managers who were increasing their holdings meaningfully (or already accumulated large positions).

According to Insider Monkey’s hedge fund database, Berkshire Hathaway, managed by Warren Buffett, holds the number one position in Moody’s Corporation (NYSE:MCO). Berkshire Hathaway has a $8.7605 billion position in the stock, comprising 3% of its 13F portfolio. The second largest stake is held by TCI Fund Management, managed by Chris Hohn, which holds a $2.3305 billion position; 5.6% of its 13F portfolio is allocated to the company. Other hedge funds and institutional investors that are bullish encompass Charles Akre’s Akre Capital Management, Dev Kantesaria’s Valley Forge Capital and Nicolai Tangen’s Ako Capital. In terms of the portfolio weights assigned to each position Rings Capital Management allocated the biggest weight to Moody’s Corporation (NYSE:MCO), around 37.97% of its 13F portfolio. Valley Forge Capital is also relatively very bullish on the stock, dishing out 16.31 percent of its 13F equity portfolio to MCO.

Now, some big names have been driving this bullishness. Oribel Capital Management, managed by Mikal Patel, created the most outsized call position in Moody’s Corporation (NYSE:MCO). Oribel Capital Management had $76.3 million invested in the company at the end of the quarter. Renaissance Technologies also initiated a $37.9 million position during the quarter. The following funds were also among the new MCO investors: Paul Tudor Jones’s Tudor Investment Corp, D. E. Shaw’s D E Shaw, and Jaime Sterne’s Skye Global Management.

Let’s check out hedge fund activity in other stocks similar to Moody’s Corporation (NYSE:MCO). We will take a look at The Southern Company (NYSE:SO), ICICI Bank Limited (NYSE:IBN), Illinois Tool Works Inc. (NYSE:ITW), Regeneron Pharmaceuticals Inc (NASDAQ:REGN), Intercontinental Exchange Inc (NYSE:ICE), Bank of Montreal (NYSE:BMO), and Aon plc (NYSE:AON). All of these stocks’ market caps are similar to MCO’s market cap.

View table here if you experience formatting issues.

As you can see these stocks had an average of 35.4 hedge funds with bullish positions and the average amount invested in these stocks was $2003 million. That figure was $15700 million in MCO’s case. Intercontinental Exchange Inc (NYSE:ICE) is the most popular stock in this table. On the other hand Bank of Montreal (NYSE:BMO) is the least popular one with only 12 bullish hedge fund positions. Compared to these stocks Moody’s Corporation (NYSE:MCO) is more popular among hedge funds. Our overall hedge fund sentiment score for MCO is 88.5. 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 returned 28.6% in 2021 through November 30th but still managed to beat the market by 5.6 percentage points. Hedge funds were also right about betting on MCO as the stock returned 10.2% since the end of September (through 11/30) 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.

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Disclosure: None. This article was originally published at Insider Monkey.