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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 September 30, so let’s proceed with the discussion of the hedge fund sentiment on Marathon Oil Corporation (NYSE:MRO).
Is MRO a good stock to buy now? The best stock pickers were in a bearish mood. The number of bullish hedge fund bets fell by 10 in recent months. Marathon Oil Corporation (NYSE:MRO) was in 16 hedge funds' portfolios at the end of September. The all time high for this statistic is 39. Our calculations also showed that MRO isn't among the 30 most popular stocks among hedge funds (click for Q3 rankings and see the video for a quick look at the top 5 stocks). There were 26 hedge funds in our database with MRO positions at the end of the second quarter.
Video: Watch our video about the top 5 most popular hedge fund stocks.
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 113% since March 2017 and outperformed the S&P 500 ETFs by more than 66 percentage points. Our short strategy outperformed the S&P 500 short ETFs by 20 percentage points annually (see the details here). That's why we believe hedge fund sentiment is a useful indicator that investors should pay attention to.
David Siegel of Two Sigma Advisors
At Insider Monkey we scour multiple sources to uncover the next great investment idea. For example, 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 real estate prices. So, we recommended this real estate stock to our monthly premium newsletter subscribers. We go through lists like the 15 best blue chip stocks 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. Now we're going to take a peek at the recent hedge fund action surrounding Marathon Oil Corporation (NYSE:MRO).
Do Hedge Funds Think MRO Is A Good Stock To Buy Now?
At third quarter's end, a total of 16 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -38% from one quarter earlier. Below, you can check out the change in hedge fund sentiment towards MRO over the last 21 quarters. With the smart money's positions undergoing their usual ebb and flow, there exists an "upper tier" of notable hedge fund managers who were boosting their stakes meaningfully (or already accumulated large positions).
According to publicly available hedge fund and institutional investor holdings data compiled by Insider Monkey, Peter Rathjens, Bruce Clarke and John Campbell's Arrowstreet Capital has the number one position in Marathon Oil Corporation (NYSE:MRO), worth close to $56.6 million, accounting for 0.1% of its total 13F portfolio. Coming in second is Fisher Asset Management, managed by Ken Fisher, which holds a $28.4 million position; less than 0.1%% of its 13F portfolio is allocated to the stock. Some other peers with similar optimism consist of John Overdeck and David Siegel's Two Sigma Advisors, D. E. Shaw's D E Shaw and Cliff Asness's AQR Capital Management. In terms of the portfolio weights assigned to each position PDT Partners allocated the biggest weight to Marathon Oil Corporation (NYSE:MRO), around 0.19% of its 13F portfolio. Arrowstreet Capital is also relatively very bullish on the stock, dishing out 0.09 percent of its 13F equity portfolio to MRO.
Due to the fact that Marathon Oil Corporation (NYSE:MRO) has faced a decline in interest from hedge fund managers, it's safe to say that there was a specific group of funds that elected to cut their positions entirely heading into Q4. It's worth mentioning that Dmitry Balyasny's Balyasny Asset Management dumped the biggest investment of the "upper crust" of funds tracked by Insider Monkey, totaling close to $22.4 million in stock, and Ben Levine, Andrew Manuel and Stefan Renold's LMR Partners was right behind this move, as the fund cut about $2.1 million worth. These bearish behaviors are important to note, as total hedge fund interest fell by 10 funds heading into Q4.
Let's now take a look at hedge fund activity in other stocks similar to Marathon Oil Corporation (NYSE:MRO). These stocks are Blackstone Mortgage Trust Inc (NYSE:BXMT), Quaker Chemical Corp (NYSE:KWR), HollyFrontier Corporation (NYSE:HFC), Omnicell, Inc. (NASDAQ:OMCL), Taylor Morrison Home Corp (NYSE:TMHC), Western Alliance Bancorporation (NYSE:WAL), and WNS (Holdings) Limited (NYSE:WNS). All of these stocks' market caps are closest to MRO's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position BXMT,24,138471,0 KWR,16,141709,3 HFC,28,265738,1 OMCL,22,116470,6 TMHC,35,311698,2 WAL,28,125862,4 WNS,21,265140,1 Average,24.9,195013,2.4 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 24.9 hedge funds with bullish positions and the average amount invested in these stocks was $195 million. That figure was $141 million in MRO's case. Taylor Morrison Home Corp (NYSE:TMHC) is the most popular stock in this table. On the other hand Quaker Chemical Corp (NYSE:KWR) is the least popular one with only 16 bullish hedge fund positions. Compared to these stocks Marathon Oil Corporation (NYSE:MRO) is even less popular than KWR. Our overall hedge fund sentiment score for MRO is 7.3. 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. Hedge funds clearly dropped the ball on MRO as the stock delivered strong returns, though hedge funds' consensus picks still generated respectable returns. Our calculations showed that top 20 most popular stocks among hedge funds returned 41.3% in 2019 and outperformed the S&P 500 ETF (SPY) by 10 percentage points. These stocks gained 30.7% in 2020 through December 14th and still beat the market by 15.8 percentage points. A small number of hedge funds were also right about betting on MRO as the stock returned 65.2% since Q3 (through December 14th) and outperformed the market by an even larger margin.
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Disclosure: None. This article was originally published at Insider Monkey.
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