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Was The Smart Money Right About Marathon Petroleum Corp (MPC)?

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  • MPC

The Insider Monkey team has completed processing the quarterly 13F filings for the June quarter submitted by the hedge funds and other money managers included in our extensive database. Most hedge fund investors experienced strong gains on the back of a strong market performance, which certainly propelled them to adjust their equity holdings so as to maintain the desired risk profile. As a result, the relevancy of these public filings and their content is indisputable, as they may reveal numerous high-potential stocks. The following article will discuss the smart money sentiment towards Marathon Petroleum Corp (NYSE:MPC).

Is Marathon Petroleum Corp (NYSE:MPC) worth your attention right now? Hedge funds were turning bullish. The number of long hedge fund positions increased by 2 lately. Marathon Petroleum Corp (NYSE:MPC) was in 48 hedge funds' portfolios at the end of June. The all time high for this statistic is 72. Our calculations also showed that MPC isn't among the 30 most popular stocks among hedge funds (click for Q2 rankings). There were 46 hedge funds in our database with MPC holdings at the end of March.

In today’s marketplace there are plenty of tools shareholders have at their disposal to analyze stocks. A pair of the most useful tools are hedge fund and insider trading signals. Our researchers have shown that, historically, those who follow the best picks of the elite hedge fund managers can outpace their index-focused peers by a solid margin (see the details here). Also, our monthly newsletter's portfolio of long stock picks returned 185.4% since March 2017 (through August 2021) and beat the S&P 500 Index by more than 79 percentage points. You can download a sample issue of this newsletter on our website.


Paul Singer of Elliott Management

At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, billionaire John Paulson is loading up on the miners, so we are checking out stock pitches like this mining 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. Now we're going to take a glance at the latest hedge fund action regarding Marathon Petroleum Corp (NYSE:MPC).

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

At second quarter's end, a total of 48 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 4% from the first quarter of 2020. By comparison, 62 hedge funds held shares or bullish call options in MPC a year ago. With the smart money's positions undergoing their usual ebb and flow, there exists a select group of key hedge fund managers who were adding to their holdings substantially (or already accumulated large positions).

The largest stake in Marathon Petroleum Corp (NYSE:MPC) was held by Elliott Investment Management, which reported holding $638.6 million worth of stock at the end of June. It was followed by D E Shaw with a $541.3 million position. Other investors bullish on the company included Laurion Capital Management, Millennium Management, and Empyrean Capital Partners. In terms of the portfolio weights assigned to each position Elliott Investment Management allocated the biggest weight to Marathon Petroleum Corp (NYSE:MPC), around 4.92% of its 13F portfolio. Empyrean Capital Partners is also relatively very bullish on the stock, dishing out 3.8 percent of its 13F equity portfolio to MPC.

As aggregate interest increased, key money managers were breaking ground themselves. Elliott Investment Management, managed by Paul Singer, assembled the biggest call position in Marathon Petroleum Corp (NYSE:MPC). Elliott Investment Management had $81.6 million invested in the company at the end of the quarter. Peter Rathjens, Bruce Clarke and John Campbell's Arrowstreet Capital also made a $5.4 million investment in the stock during the quarter. The following funds were also among the new MPC investors: Ryan Tolkin (CIO)'s Schonfeld Strategic Advisors, Ben Levine, Andrew Manuel and Stefan Renold's LMR Partners, and Qing Li's Sciencast Management.

Let's check out hedge fund activity in other stocks similar to Marathon Petroleum Corp (NYSE:MPC). We will take a look at The Allstate Corporation (NYSE:ALL), Fortinet Inc (NASDAQ:FTNT), Paychex, Inc. (NASDAQ:PAYX), Rocket Companies, Inc. (NYSE:RKT), Manulife Financial Corporation (NYSE:MFC), Cadence Design Systems Inc (NASDAQ:CDNS), and The Travelers Companies Inc (NYSE:TRV). This group of stocks' market values match MPC's market value.

[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position ALL,33,923765,-8 FTNT,32,850545,9 PAYX,29,940182,4 RKT,13,115980,-8 MFC,18,307415,1 CDNS,33,1623503,3 TRV,34,579032,-1 Average,27.4,762917,0 [/table]

View table here if you experience formatting issues.

As you can see these stocks had an average of 27.4 hedge funds with bullish positions and the average amount invested in these stocks was $763 million. That figure was $2616 million in MPC's case. The Travelers Companies Inc (NYSE:TRV) is the most popular stock in this table. On the other hand Rocket Companies, Inc. (NYSE:RKT) is the least popular one with only 13 bullish hedge fund positions. Compared to these stocks Marathon Petroleum Corp (NYSE:MPC) is more popular among hedge funds. Our overall hedge fund sentiment score for MPC is 77. 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 returned 29.6% in 2021 through November 5th but still managed to beat the market by 3.1 percentage points. Hedge funds were also right about betting on MPC as the stock returned 10% since the end of June (through 11/5) and outperformed the market by an even larger margin. Hedge funds were clearly right about piling into this stock relative to other stocks with similar market capitalizations.

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