The 800+ hedge funds and famous money managers tracked by Insider Monkey have already compiled and submitted their 13F filings for the first quarter, which unveil their equity positions as of March 31st. We went through these filings, fixed typos and other more significant errors and identified the changes in hedge fund portfolios. Our extensive review of these public filings is finally over, so this article is set to reveal the smart money sentiment towards Marathon Oil Corporation (NYSE:MRO).
Marathon Oil Corporation (NYSE:MRO) was in 29 hedge funds’ portfolios at the end of the first quarter of 2021. The all time high for this statistic is 39. MRO has experienced an increase in activity from the world’s largest hedge funds recently. There were 26 hedge funds in our database with MRO holdings at the end of December. Our calculations also showed that MRO isn’t among the 30 most popular stocks among hedge funds (click for Q1 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 115 percentage points since March 2017 (see the details here). We have been able to outperform the passive index funds by tracking the moves of corporate insiders and hedge funds, and we believe small investors can benefit a lot from reading hedge fund investor letters and 13F filings.
At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, lithium mining is one of the fastest growing industries right now, 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. Keeping this in mind we’re going to check out the recent hedge fund action encompassing Marathon Oil Corporation (NYSE:MRO).
Do Hedge Funds Think MRO Is A Good Stock To Buy Now?
At the end of the first quarter, a total of 29 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 12% from one quarter earlier. By comparison, 24 hedge funds held shares or bullish call options in MRO a year ago. So, let’s see which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
When looking at the institutional investors followed by Insider Monkey, Peter Rathjens, Bruce Clarke and John Campbell’s Arrowstreet Capital has the largest position in Marathon Oil Corporation (NYSE:MRO), worth close to $81.6 million, comprising 0.1% of its total 13F portfolio. Sitting at the No. 2 spot is Ken Fisher of Fisher Asset Management, with a $78.4 million position; the fund has 0.1% of its 13F portfolio invested in the stock. Remaining professional money managers that are bullish encompass D. E. Shaw’s D E Shaw, John Overdeck and David Siegel’s Two Sigma Advisors and Brandon Haley’s Holocene Advisors. In terms of the portfolio weights assigned to each position Encompass Capital Advisors allocated the biggest weight to Marathon Oil Corporation (NYSE:MRO), around 1.18% of its 13F portfolio. Carlson Capital is also relatively very bullish on the stock, dishing out 0.23 percent of its 13F equity portfolio to MRO.
With a general bullishness amongst the heavyweights, key hedge funds have been driving this bullishness. Holocene Advisors, managed by Brandon Haley, established the most valuable position in Marathon Oil Corporation (NYSE:MRO). Holocene Advisors had $30.6 million invested in the company at the end of the quarter. Steve Cohen’s Point72 Asset Management also made a $7.3 million investment in the stock during the quarter. The other funds with new positions in the stock are Clint Carlson’s Carlson Capital, Paul Marshall and Ian Wace’s Marshall Wace LLP, and Frank Fu’s CaaS Capital.
Let’s also examine hedge fund activity in other stocks similar to Marathon Oil Corporation (NYSE:MRO). We will take a look at Kinross Gold Corporation (NYSE:KGC), Gold Fields Limited (NYSE:GFI), Hyatt Hotels Corporation (NYSE:H), Juniper Networks, Inc. (NYSE:JNPR), Gerdau SA (NYSE:GGB), Huntington Ingalls Industries Inc (NYSE:HII), and Santander Consumer USA Holdings Inc (NYSE:SC). This group of stocks’ market valuations are closest to MRO’s market valuation.
|Ticker||No of HFs with positions||Total Value of HF Positions (x1000)||Change in HF Position|
View table here if you experience formatting issues.
As you can see these stocks had an average of 21.1 hedge funds with bullish positions and the average amount invested in these stocks was $366 million. That figure was $424 million in MRO’s case. Juniper Networks, Inc. (NYSE:JNPR) is the most popular stock in this table. On the other hand Gerdau SA (NYSE:GGB) is the least popular one with only 11 bullish hedge fund positions. Marathon Oil Corporation (NYSE:MRO) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for MRO is 80.3. 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. 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 22.8% in 2021 through July 2nd and still beat the market by 6 percentage points. Hedge funds were also right about betting on MRO as the stock returned 30.1% since the end of Q1 (through 7/2) and outperformed the market. Hedge funds were rewarded for their relative bullishness.
Follow Marathon Oil Corp (NYSE:MRO)
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Disclosure: None. This article was originally published at Insider Monkey.