In this article we will check out the progression of hedge fund sentiment towards Marriott International Inc (NASDAQ:MAR) and determine whether it is a good investment right now. We at Insider Monkey like to examine what billionaires and hedge funds think of a company before spending days of research on it. Given their 2 and 20 payment structure, hedge funds have more incentives and resources than the average investor. The funds have access to expert networks and get tips from industry insiders. They also employ numerous Ivy League graduates and MBAs. Like everyone else, hedge funds perform miserably at times, but their consensus picks have historically outperformed the market after risk adjustments.
Marriott International Inc (NASDAQ:MAR) has seen an increase in support from the world’s most elite money managers lately. Marriott International Inc (NASDAQ:MAR) was in 48 hedge funds’ portfolios at the end of the second quarter of 2020. The all time high for this statistics is 48. This means the bullish number of hedge fund positions in this stock currently sits at its all time high. There were 47 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 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.
Hedge funds’ reputation as shrewd investors has been tarnished in the last decade as their hedged returns couldn’t keep up with the unhedged returns of the market indices. Our research has shown that hedge funds’ small-cap stock picks managed to beat the market by double digits annually between 1999 and 2016, but the margin of outperformance has been declining in recent years. Nevertheless, we were still able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by 58 percentage points since March 2017 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that underperformed the market by 10 percentage points annually between 2006 and 2017. Interestingly the margin of underperformance of these stocks has been increasing in recent years. Investors who are long the market and short these stocks would have returned more than 27% annually between 2015 and 2017. We have been tracking and sharing the list of these stocks since February 2017 in our quarterly newsletter.
Boykin Curry of Eagle Capital
At Insider Monkey we scour multiple sources to uncover the next great investment idea. Hedge fund sentiment towards Tesla reached its all time high at the end of 2019 and Tesla shares more than quadrupled this year. We are trying to identify other EV revolution winners, so we are checking out this under-the-radar lithium stock. We go through lists like the 10 most profitable companies in the world to pick the best large-cap stocks to buy. 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 website to get excerpts of these letters in your inbox. Keeping this in mind let’s view the key hedge fund action encompassing Marriott International Inc (NASDAQ:MAR).
How are hedge funds trading Marriott International Inc (NASDAQ:MAR)?
At Q2’s end, a total of 48 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 2% from the previous quarter. The graph below displays the number of hedge funds with bullish position in MAR over the last 20 quarters. With hedge funds’ capital changing hands, there exists a few noteworthy hedge fund managers who were boosting their holdings meaningfully (or already accumulated large positions).
More specifically, Eagle Capital Management was the largest shareholder of Marriott International Inc (NASDAQ:MAR), with a stake worth $1181.2 million reported as of the end of September. Trailing Eagle Capital Management was Ako Capital, which amassed a stake valued at $171.8 million. Soroban Capital Partners, First Pacific Advisors LLC, and Renaissance Technologies 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 BlueDrive Global Investors allocated the biggest weight to Marriott International Inc (NASDAQ:MAR), around 7.12% of its 13F portfolio. Crake Asset Management is also relatively very bullish on the stock, dishing out 5.62 percent of its 13F equity portfolio to MAR.
Now, some big names were leading the bulls’ herd. Soroban Capital Partners, managed by Eric W. Mandelblatt and Gaurav Kapadia, initiated the largest position in Marriott International Inc (NASDAQ:MAR). Soroban Capital Partners had $115 million invested in the company at the end of the quarter. Larry Robbins’s Glenview Capital also made a $61.9 million investment in the stock during the quarter. The other funds with new positions in the stock are Martin Taylor’s Crake Asset Management, Hyder Ahmad’s Broad Peak Investment Holdings, and John Khoury’s Long Pond Capital.
Let’s now review hedge fund activity in other stocks – not necessarily in the same industry as Marriott International Inc (NASDAQ:MAR) but similarly valued. These stocks are ResMed Inc. (NYSE:RMD), SYSCO Corporation (NYSE:SYY), Cintas Corporation (NASDAQ:), WEC Energy Group, Inc. (NYSE:WEC), The Clorox Company (NYSE:CLX), Verisk Analytics, Inc. (NASDAQ:VRSK), and IAC/InterActiveCorp (NASDAQ:IAC). This group of stocks’ market caps are closest to MAR’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| RMD | 25 | 224162 | -8 |
| SYY | 42 | 2177488 | 7 |
| CTAS | 34 | 531899 | -8 |
| WEC | 30 | 290696 | 1 |
| CLX | 36 | 1488687 | -5 |
| VRSK | 36 | 981827 | 5 |
| IAC | 60 | 4955863 | 3 |
| Average | 37.6 | 1521517 | -0.7 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 37.6 hedge funds with bullish positions and the average amount invested in these stocks was $1522 million. That figure was $2159 million in MAR’s case. IAC/InterActiveCorp (NASDAQ:IAC) is the most popular stock in this table. On the other hand ResMed Inc. (NYSE:RMD) is the least popular one with only 25 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 68.9. 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 41.4% in 2019 and outperformed the S&P 500 ETF (SPY) by 10.1 percentage points. These stocks gained 30% in 2020 through October 23rd and still beat the market by 21 percentage points. Hedge funds were also right about betting on MAR as the stock returned 18.7% since the end of Q2 (through 10/23) and outperformed the market. Hedge funds were rewarded for their relative bullishness.
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Disclosure: None. This article was originally published at Insider Monkey.
