Insider Monkey has processed numerous 13F filings of hedge funds and successful value investors to create an extensive database of hedge fund holdings. The 13F filings show the hedge funds’ and successful investors’ positions as of the end of the third quarter. You can find articles about an individual hedge fund’s trades on numerous financial news websites. However, in this article we will take a look at their collective moves over the last 6 years and analyze what the smart money thinks of Martin Marietta Materials, Inc. (NYSE:MLM) based on that data and determine whether they were really smart about the stock.
Is Martin Marietta Materials, Inc. (NYSE:MLM) undervalued? Hedge funds were buying. The number of long hedge fund positions rose by 8 in recent months. Martin Marietta Materials, Inc. (NYSE:MLM) was in 42 hedge funds’ portfolios at the end of September. The all time high for this statistic is 52. Our calculations also showed that MLM 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 new hedge fund action surrounding Martin Marietta Materials, Inc. (NYSE:MLM).
Do Hedge Funds Think MLM Is A Good Stock To Buy Now?
At third quarter’s end, a total of 42 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 24% from the second quarter of 2021. The graph below displays the number of hedge funds with bullish position in MLM over the last 25 quarters. So, let’s examine which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
The largest stake in Martin Marietta Materials, Inc. (NYSE:MLM) was held by Select Equity Group, which reported holding $1177.3 million worth of stock at the end of September. It was followed by Gardner Russo & Gardner with a $407.4 million position. Other investors bullish on the company included Alkeon Capital Management, Nitorum Capital, and Melvin Capital Management. In terms of the portfolio weights assigned to each position Cartenna Capital allocated the biggest weight to Martin Marietta Materials, Inc. (NYSE:MLM), around 6.32% of its 13F portfolio. Select Equity Group is also relatively very bullish on the stock, dishing out 3.95 percent of its 13F equity portfolio to MLM.
As one would reasonably expect, key money managers were leading the bulls’ herd. Melvin Capital Management, managed by Gabriel Plotkin, assembled the most outsized position in Martin Marietta Materials, Inc. (NYSE:MLM). Melvin Capital Management had $34.2 million invested in the company at the end of the quarter. Benjamin A. Smith’s Laurion Capital Management also made a $6.8 million investment in the stock during the quarter. The following funds were also among the new MLM investors: Javier Velazquez’s Albar Capital, Brad Dunkley and Blair Levinsky’s Waratah Capital Advisors, and Dmitry Balyasny’s Balyasny Asset Management.
Let’s go over hedge fund activity in other stocks similar to Martin Marietta Materials, Inc. (NYSE:MLM). These stocks are Fox Corporation (NASDAQ:FOX), Edison International (NYSE:EIX), Fortis Inc. (NYSE:FTS), ICON Public Limited Company (NASDAQ:ICLR), POSCO (NYSE:PKX), CarMax Inc (NYSE:KMX), and Cerner Corporation (NASDAQ:CERN). All of these stocks’ market caps match MLM’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| FOX | 25 | 665945 | 0 |
| EIX | 25 | 1240177 | 7 |
| FTS | 5 | 171234 | -4 |
| ICLR | 35 | 1349183 | -4 |
| PKX | 11 | 140930 | -1 |
| KMX | 36 | 1544189 | -3 |
| CERN | 36 | 1279936 | -2 |
| Average | 24.7 | 913085 | -1 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 24.7 hedge funds with bullish positions and the average amount invested in these stocks was $913 million. That figure was $2154 million in MLM’s case. CarMax Inc (NYSE:KMX) is the most popular stock in this table. On the other hand Fortis Inc. (NYSE:FTS) is the least popular one with only 5 bullish hedge fund positions. Compared to these stocks Martin Marietta Materials, Inc. (NYSE:MLM) is more popular among hedge funds. Our overall hedge fund sentiment score for MLM is 84.2. 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 29.6% in 2021 and managed to beat the market by another 3.6 percentage points. Hedge funds were also right about betting on MLM as the stock returned 14.1% since the end of September (through 1/31) 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.
