The latest 13F reporting period has come and gone, and Insider Monkey is again at the forefront when it comes to making use of this gold mine of data. Insider Monkey finished processing 887 13F filings submitted by hedge funds and prominent investors. These filings show these funds’ portfolio positions as of December 31st, 2020. In this article we are going to take a look at smart money sentiment towards Moody’s Corporation (NYSE:MCO).
Moody’s Corporation (NYSE:MCO) investors should be aware of a decrease in enthusiasm from smart money lately. Moody’s Corporation (NYSE:MCO) was in 59 hedge funds’ portfolios at the end of the fourth quarter of 2020. The all time high for this statistic is 61. Our calculations also showed that MCO isn’t among the 30 most popular stocks among hedge funds (click for Q4 rankings).
In the financial world there are a large number of tools investors have at their disposal to grade stocks. A pair of the most under-the-radar tools are hedge fund and insider trading indicators. We have shown that, historically, those who follow the top picks of the best fund managers can outperform the broader indices by a solid amount. Insider Monkey’s monthly stock picks returned 197% since March 2017 and outperformed the S&P 500 ETFs by more than 124 percentage points (see the details here). That’s why we believe hedge fund sentiment is a useful indicator that investors should pay attention to.
Andreas Halvorsen of Viking Global
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Do Hedge Funds Think MCO Is A Good Stock To Buy Now?
At the end of the fourth quarter, a total of 59 of the hedge funds tracked by Insider Monkey were long this stock, a change of -2% from one quarter earlier. By comparison, 49 hedge funds held shares or bullish call options in MCO a year ago. With the smart money’s positions undergoing their usual ebb and flow, there exists a select group of noteworthy hedge fund managers who were adding to their holdings considerably (or already accumulated large positions).
The largest stake in Moody’s Corporation (NYSE:MCO) was held by Berkshire Hathaway, which reported holding $7160.2 million worth of stock at the end of December. It was followed by Akre Capital Management with a $1634.8 million position. Other investors bullish on the company included Viking Global, Windacre Partnership, and Valley Forge 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 38.88% of its 13F portfolio. Valley Forge Capital is also relatively very bullish on the stock, setting aside 16 percent of its 13F equity portfolio to MCO.
Because Moody’s Corporation (NYSE:MCO) has experienced bearish sentiment from the entirety of the hedge funds we track, it’s easy to see that there lies a certain “tier” of fund managers who sold off their full holdings by the end of the fourth quarter. Interestingly, Doug Silverman and Alexander Klabin’s Senator Investment Group sold off the biggest position of all the hedgies monitored by Insider Monkey, comprising about $72.5 million in stock. Anand Parekh’s fund, Alyeska Investment Group, also dropped its stock, about $15.1 million worth. These bearish behaviors are important to note, as total hedge fund interest was cut by 1 funds by the end of the fourth quarter.
Let’s now review hedge fund activity in other stocks similar to Moody’s Corporation (NYSE:MCO). These stocks are Twilio Inc. (NYSE:TWLO), Humana Inc (NYSE:HUM), Illumina, Inc. (NASDAQ:ILMN), Westpac Banking Corporation (NYSE:WBK), Banco Santander, S.A. (NYSE:SAN), DuPont de Nemours Inc (NYSE:DD), and Regeneron Pharmaceuticals Inc (NASDAQ:REGN). All of these stocks’ market caps match MCO’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| TWLO | 94 | 5011455 | 23 |
| HUM | 59 | 3966420 | -2 |
| ILMN | 45 | 1747647 | 1 |
| WBK | 3 | 29715 | -1 |
| SAN | 14 | 415472 | 0 |
| DD | 60 | 6277336 | -1 |
| REGN | 46 | 1330342 | 2 |
| Average | 45.9 | 2682627 | 3.1 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 45.9 hedge funds with bullish positions and the average amount invested in these stocks was $2683 million. That figure was $11352 million in MCO’s case. Twilio Inc. (NYSE:TWLO) is the most popular stock in this table. On the other hand Westpac Banking Corporation (NYSE:WBK) is the least popular one with only 3 bullish hedge fund positions. Moody’s Corporation (NYSE:MCO) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for MCO is 63.8. 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 90.7% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 35 percentage points. These stocks gained 13.6% in 2021 through April 30th and still beat the market by 1.6 percentage points. Hedge funds were also right about betting on MCO, though not to the same extent, as the stock returned 12.8% since Q4 (through April 30th) and outperformed the market as well.
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Disclosure: None. This article was originally published at Insider Monkey.
