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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. We have processed the filings of the more than 887 world-class investment firms that we track and now have access to the collective wisdom contained in these filings, which are based on their December 31st holdings, data that is available nowhere else. Should you consider Marathon Petroleum Corp (NYSE:MPC) for your portfolio? We'll look to this invaluable collective wisdom for the answer.
Is MPC stock a buy or sell? Marathon Petroleum Corp (NYSE:MPC) investors should pay attention to a decrease in hedge fund interest lately. Marathon Petroleum Corp (NYSE:MPC) was in 43 hedge funds' portfolios at the end of December. The all time high for this statistic is 72. There were 56 hedge funds in our database with MPC positions at the end of the third quarter. Our calculations also showed that MPC isn't among the 30 most popular stocks among hedge funds (click for Q4 rankings).
So, why do we pay attention to hedge fund sentiment before making any investment decisions? 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 more than 124 percentage points since March 2017 (see the details here).
At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, the House passed a landmark bill decriminalizing marijuana. So, we are checking out this under the radar cannabis stock right now. We go through lists like the 10 best battery stocks to buy to identify the next stock with 10x upside potential. 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. Now we're going to take a gander at the latest hedge fund action encompassing Marathon Petroleum Corp (NYSE:MPC).
Do Hedge Funds Think MPC Is A Good Stock To Buy Now?
At the end of the fourth quarter, a total of 43 of the hedge funds tracked by Insider Monkey were long this stock, a change of -23% from the previous quarter. The graph below displays the number of hedge funds with bullish position in MPC over the last 22 quarters. So, let's review which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
More specifically, Elliott Investment Management was the largest shareholder of Marathon Petroleum Corp (NYSE:MPC), with a stake worth $400 million reported as of the end of December. Trailing Elliott Investment Management was Baupost Group, which amassed a stake valued at $318.1 million. Holocene Advisors, Citadel Investment Group, and Millennium Management 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 Scopia Capital allocated the biggest weight to Marathon Petroleum Corp (NYSE:MPC), around 8.29% of its 13F portfolio. Wexford Capital is also relatively very bullish on the stock, designating 5.13 percent of its 13F equity portfolio to MPC.
Due to the fact that Marathon Petroleum Corp (NYSE:MPC) has experienced a decline in interest from the aggregate hedge fund industry, we can see that there lies a certain "tier" of hedge funds who were dropping their positions entirely heading into Q1. At the top of the heap, Robert Pitts's Steadfast Capital Management dumped the biggest position of the "upper crust" of funds tracked by Insider Monkey, valued at about $21.3 million in stock. Steven Tananbaum's fund, GoldenTree Asset Management, also cut its stock, about $19.2 million worth. These moves are important to note, as total hedge fund interest dropped by 13 funds heading into Q1.
Let's also examine hedge fund activity in other stocks similar to Marathon Petroleum Corp (NYSE:MPC). These stocks are Zscaler, Inc. (NASDAQ:ZS), Ecopetrol S.A. (NYSE:EC), Interactive Brokers Group, Inc. (NASDAQ:IBKR), Paycom Software Inc (NYSE:PAYC), Sun Life Financial Inc. (NYSE:SLF), Li Auto Inc. (NASDAQ:LI), and StoneCo Ltd. (NASDAQ:STNE). All of these stocks' market caps resemble MPC's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position ZS,35,1208264,9 EC,7,102902,0 IBKR,28,1108907,0 PAYC,35,748935,-3 SLF,19,87210,6 LI,31,497858,5 STNE,47,3628999,9 Average,28.9,1054725,3.7 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 28.9 hedge funds with bullish positions and the average amount invested in these stocks was $1055 million. That figure was $1884 million in MPC's case. StoneCo Ltd. (NASDAQ:STNE) is the most popular stock in this table. On the other hand Ecopetrol S.A. (NYSE:EC) is the least popular one with only 7 bullish hedge fund positions. Marathon Petroleum Corp (NYSE:MPC) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for MPC is 54.9. 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 30 most popular stocks among hedge funds returned 81.2% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 26 percentage points. These stocks gained 5.3% in 2021 through March 19th and still beat the market by 0.8 percentage points. Hedge funds were also right about betting on MPC as the stock returned 31.5% since the end of Q4 (through 3/19) 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.