Were These Hedge Funds Right About Buying Marsh & McLennan (MMC)?

A whopping number of 13F filings filed with U.S. Securities and Exchange Commission has been processed by Insider Monkey so that individual investors can look at the overall hedge fund sentiment towards the stocks included in their watchlists. These freshly-submitted public filings disclose money managers’ equity positions as of the end of the three-month period that ended June 30th, so let’s proceed with the discussion of the hedge fund sentiment on Marsh & McLennan Companies, Inc. (NYSE:MMC).

Marsh & McLennan Companies, Inc. (NYSE:MMC) has experienced an increase in support from the world’s most elite money managers of late. Marsh & McLennan Companies, Inc. (NYSE:MMC) was in 41 hedge funds’ portfolios at the end of the second quarter of 2021. The all time high for this statistic is 43. There were 37 hedge funds in our database with MMC positions at the end of the first quarter. Our calculations also showed that MMC isn’t among the 30 most popular stocks among hedge funds (click for Q2 rankings).

Why do we pay any attention at all to hedge fund sentiment? Our research has shown that a select group of hedge fund holdings outperformed the S&P 500 ETFs by 79 percentage points since March 2017 (see the details here). That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.

Ole Andreas Halvorsen of Viking Global

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 are checking out stock pitches like this emerging lithium stock. 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. 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 homepage. With all of this in mind let’s analyze the latest hedge fund action encompassing Marsh & McLennan Companies, Inc. (NYSE:MMC).

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

Heading into the third quarter of 2021, a total of 41 of the hedge funds tracked by Insider Monkey were long this stock, a change of 11% from the first quarter of 2020. By comparison, 38 hedge funds held shares or bullish call options in MMC a year ago. So, let’s check out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

More specifically, Berkshire Hathaway was the largest shareholder of Marsh & McLennan Companies, Inc. (NYSE:MMC), with a stake worth $590.4 million reported as of the end of June. Trailing Berkshire Hathaway was Diamond Hill Capital, which amassed a stake valued at $315.8 million. Viking Global, Arrowstreet Capital, and Polar Capital 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 3G Sahana Capital Management allocated the biggest weight to Marsh & McLennan Companies, Inc. (NYSE:MMC), around 10.48% of its 13F portfolio. Bishop Rock Capital is also relatively very bullish on the stock, dishing out 4.66 percent of its 13F equity portfolio to MMC.

As industrywide interest jumped, key hedge funds have jumped into Marsh & McLennan Companies, Inc. (NYSE:MMC) headfirst. Senator Investment Group, managed by Doug Silverman and Alexander Klabin, assembled the biggest position in Marsh & McLennan Companies, Inc. (NYSE:MMC). Senator Investment Group had $118.2 million invested in the company at the end of the quarter. David Costen Haley’s HBK Investments also made a $28.1 million investment in the stock during the quarter. The other funds with brand new MMC positions are Dmitry Balyasny’s Balyasny Asset Management, Sander Gerber’s Hudson Bay Capital Management, and Steve Cohen’s Point72 Asset Management.

Let’s now take a look at hedge fund activity in other stocks – not necessarily in the same industry as Marsh & McLennan Companies, Inc. (NYSE:MMC) but similarly valued. We will take a look at Chubb Limited (NYSE:CB), Baidu, Inc. (NASDAQ:BIDU), Westpac Banking Corporation (NYSE:WBK), Fiserv, Inc. (NASDAQ:FISV), Becton, Dickinson and Company (NYSE:BDX), Illinois Tool Works Inc. (NYSE:ITW), and Capital One Financial Corp. (NYSE:COF). All of these stocks’ market caps match MMC’s market cap.

View table here if you experience formatting issues.

As you can see these stocks had an average of 48.3 hedge funds with bullish positions and the average amount invested in these stocks was $2279 million. That figure was $2537 million in MMC’s case. Fiserv, Inc. (NASDAQ:FISV) is the most popular stock in this table. On the other hand Westpac Banking Corporation (NYSE:WBK) is the least popular one with only 4 bullish hedge fund positions. Marsh & McLennan Companies, Inc. (NYSE:MMC) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for MMC is 64.8. 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 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 gained 29.6% in 2021 through November 5th and still beat the market by 3.1 percentage points. A small number of hedge funds were also right about betting on MMC as the stock returned 15.6% since the end of the second quarter (through 11/5) and outperformed the market by an even larger margin.

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