Is Marathon Oil Corporation (NYSE:MRO) a good stock to buy now? The smart money is getting less optimistic. The number of bullish hedge fund bets fell by 3 recently.
To most traders, hedge funds are assumed to be unimportant, outdated financial tools of years past. While there are greater than 8000 funds trading at present, we at Insider Monkey look at the moguls of this group, about 450 funds. Most estimates calculate that this group oversees the lion’s share of all hedge funds’ total asset base, and by paying attention to their top equity investments, we have formulated a number of investment strategies that have historically outpaced the broader indices. Our small-cap hedge fund strategy outpaced the S&P 500 index by 18 percentage points a year for a decade in our back tests, and since we’ve started sharing our picks with our subscribers at the end of August 2012, we have topped the S&P 500 index by 23.3 percentage points in 8 months (explore the details and some picks here).
Equally as important, optimistic insider trading activity is another way to break down the marketplace. Obviously, there are plenty of reasons for a corporate insider to get rid of shares of his or her company, but just one, very obvious reason why they would buy. Plenty of empirical studies have demonstrated the market-beating potential of this tactic if investors know where to look (learn more here).
Keeping this in mind, we’re going to take a glance at the recent action encompassing Marathon Oil Corporation (NYSE:MRO).
How have hedgies been trading Marathon Oil Corporation (NYSE:MRO)?
Heading into Q2, a total of 39 of the hedge funds we track held long positions in this stock, a change of -7% from one quarter earlier. With hedgies’ capital changing hands, there exists an “upper tier” of key hedge fund managers who were increasing their stakes significantly.
When looking at the hedgies we track, Ken Griffin’s Citadel Investment Group had the most valuable position in Marathon Oil Corporation (NYSE:MRO), worth close to $143.7 million, comprising 0.2% of its total 13F portfolio. The second largest stake is held by AQR Capital Management, managed by Cliff Asness, which held a $85.4 million position; 0.3% of its 13F portfolio is allocated to the company. Some other hedge funds with similar optimism include Israel Englander’s Millennium Management, Steven Cohen’s SAC Capital Advisors and Bernard Horn’s Polaris Capital Management.
Judging by the fact that Marathon Oil Corporation (NYSE:MRO) has witnessed a declination in interest from hedge fund managers, logic holds that there exists a select few fund managers that slashed their positions entirely heading into Q2. It’s worth mentioning that Paul Tudor Jones’s Tudor Investment Corp said goodbye to the biggest position of all the hedgies we watch, worth close to $15.3 million in call options. Malcolm Fairbairn’s fund, Ascend Capital, also dumped its stock, about $11.4 million worth. These bearish behaviors are interesting, as aggregate hedge fund interest was cut by 3 funds heading into Q2.
How are insiders trading Marathon Oil Corporation (NYSE:MRO)?
Insider trading activity, especially when it’s bullish, is at its handiest when the primary stock in question has experienced transactions within the past 180 days. Over the latest 180-day time period, Marathon Oil Corporation (NYSE:MRO) has experienced zero unique insiders buying, and 2 insider sales (see the details of insider trades here).
Let’s check out hedge fund and insider activity in other stocks similar to Marathon Oil Corporation (NYSE:MRO). These stocks are Ultrapar Participacoes SA (ADR) (NYSE:UGP), Imperial Oil Limited (USA) (NYSEAMEX:IMO), Marathon Petroleum Corp (NYSE:MPC), Valero Energy Corporation (NYSE:VLO), and Hess Corp. (NYSE:HES). All of these stocks are in the oil & gas refining & marketing industry and their market caps match MRO’s market cap.