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 Marriott International Inc (NYSE:MAR) and determine whether hedge funds had an edge regarding this stock.
Is Marriott International Inc (NYSE:MAR) a healthy stock for your portfolio? Money managers were getting more bullish. The number of bullish hedge fund positions rose by 10 in recent months. Our calculations also showed that MAR isn’t among the 30 most popular stocks among hedge funds (click for Q1 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.
At the moment there are dozens of tools investors can use to evaluate their stock investments. A couple of the best tools are hedge fund and insider trading sentiment. Our experts have shown that, historically, those who follow the best picks of the elite fund managers can outclass the market by a healthy amount (see the details here).
Stuart Zimmer of Zimmer Partners
At Insider Monkey we scour multiple sources to uncover the next great investment idea. For example, this trader claims to score lucrative profits by utilizing a “weekend trading strategy”, so we look into his strategy’s picks. Federal Reserve has been creating trillions of dollars electronically to keep the interest rates near zero. We believe this will lead to inflation and boost gold prices. So, we are checking out this junior gold mining stock. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. We recently recommended several stocks partly inspired by legendary Bill Miller’s investor letter. Our best call in 2020 was shorting the market when the S&P 500 was trading at 3150 in February after realizing the coronavirus pandemic’s significance before most investors. Now let’s take a look at the key hedge fund action encompassing Marriott International Inc (NYSE:MAR).
How have hedgies been trading Marriott International Inc (NYSE:MAR)?
At the end of the first quarter, a total of 47 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 27% from one quarter earlier. The graph below displays the number of hedge funds with bullish position in MAR over the last 18 quarters. With the smart money’s capital changing hands, there exists a select group of notable hedge fund managers who were increasing their stakes meaningfully (or already accumulated large positions).
Of the funds tracked by Insider Monkey, Eagle Capital Management, managed by Boykin Curry, holds the biggest position in Marriott International Inc (NYSE:MAR). Eagle Capital Management has a $1.0207 billion position in the stock, comprising 4.2% of its 13F portfolio. Sitting at the No. 2 spot is Markel Gayner Asset Management, led by Tom Gayner, holding a $119.2 million position; 2.2% of its 13F portfolio is allocated to the company. Some other professional money managers with similar optimism contain Nicolai Tangen’s Ako Capital, Ricky Sandler’s Eminence Capital and Eric W. Mandelblatt and Gaurav Kapadia’s Soroban Capital Partners. In terms of the portfolio weights assigned to each position Kamunting Street Capital allocated the biggest weight to Marriott International Inc (NYSE:MAR), around 7.9% of its 13F portfolio. Eagle Capital Management is also relatively very bullish on the stock, dishing out 4.23 percent of its 13F equity portfolio to MAR.
As aggregate interest increased, key hedge funds have been driving this bullishness. Ako Capital, managed by Nicolai Tangen, assembled the most outsized position in Marriott International Inc (NYSE:MAR). Ako Capital had $109.1 million invested in the company at the end of the quarter. Ricky Sandler’s Eminence Capital also initiated a $82.6 million position during the quarter. The other funds with new positions in the stock are Israel Englander’s Millennium Management, Stuart J. Zimmer’s Zimmer Partners, and Richard Merage’s MIG Capital.
Let’s check out hedge fund activity in other stocks similar to Marriott International Inc (NYSE:MAR). These stocks are Mercadolibre Inc (NASDAQ:MELI), Suncor Energy Inc. (NYSE:SU), Republic Services, Inc. (NYSE:RSG), and IHS Markit Ltd. (NASDAQ:INFO). All of these stocks’ market caps match MAR’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| MELI | 60 | 2099088 | 8 |
| SU | 30 | 766498 | -9 |
| RSG | 32 | 709358 | 6 |
| INFO | 44 | 1159316 | 15 |
| Average | 41.5 | 1183565 | 5 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 41.5 hedge funds with bullish positions and the average amount invested in these stocks was $1184 million. That figure was $1554 million in MAR’s case. Mercadolibre Inc (NASDAQ:MELI) is the most popular stock in this table. On the other hand Suncor Energy Inc. (NYSE:SU) is the least popular one with only 30 bullish hedge fund positions. Marriott International Inc (NYSE:MAR) is not the most popular stock in this group but hedge fund interest is still above average. This is a slightly positive signal but we’d rather spend our time researching stocks that hedge funds are piling on. 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 12.3% in 2020 through June 30th but beat the market by 15.5 percentage points. Unfortunately MAR wasn’t nearly as popular as these 10 stocks and hedge funds that were betting on MAR were disappointed as the stock returned 14.6% during the same time period and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 10 most popular stocks among hedge funds as many of these stocks already outperformed the market so far this year.
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Disclosure: None. This article was originally published at Insider Monkey.
