Marathon Petroleum
The hedge fund also reported ownership of 910,791 shares of Marathon Petroleum Corp (NYSE:MPC), down from 939,391 shares reported in the previous filing. The value of the stake increased to $81.6 million, from $59.2 million, however, as shares of the oil and gas refiner & marketer have returned more than 25% year-to-date. Marathon Petroleum Corp (NYSE:MPC) is still trading at a forward P/E of 7.4x, and we’ll be watching its plans to spend $300 million to augment refining capacity in two facilities in Ohio’s Utica shale.
Marathon Petroleum Corp (NYSE:MPC) also has refineries in East Texas, Louisiana, Illinois, Kentucky and Detroit, Michigan. Aside from being a bet on domestic energy—something we’ve seen a lot of lately in the hedge fund industry—Horn and Polaris’ play in Marathon Petroleum Corp (NYSE:MPC) specifically indicates their willingness to dig deep into the value bin. Some investors may prefer E&P companies, or even the barges that ship oil down to LNG export facilities, but on the whole, Marathon offers a bargain that literally can’t be beat.
The company’s stock sports the fifth lowest year-ahead earnings multiple of its peers in the refining industry, and its price-to-sales multiple is at a whopping 70% below parity. A PEG near 0.70 also indicates that Mr. Market doesn’t believe the sell-side’s earnings forecast of 11% annual growth over the next five years, which is below peers like Tesoro Corporation (NYSE:TSO) and Eagle Rock. Needless to say, if Marathon Petroleum Corp (NYSE:MPC) can prosper in the Utica shale while holding steady in the rest of its operations, this discount should be erased sooner rather than later. It’s easy to see why Polaris is bullish.
Best of the rest
Polaris disclosed a $68 million stakein BHP Billiton Limited (ADR) (NYSE:BHP), totalling 1,171,049 shares. In the previous filing, the hedge fund reported holding 1,034,749 shares, worth $72.8 million. Carter’sis the last in our top five list, with the fund holding a $64.6 million position. The number ofshares held by the fund remains unchanged from the end of last year at 1,127,851 shares. The previous value of the holding was $62.8 million.
Final thoughts
It appears that Polaris is loaded up on each of its top holdings for very different reasons. From Infosys Ltd ADR (NYSE:INFY)’s position as IT’s falling knife to Teva Pharmaceutical Industries Ltd (ADR) (NYSE:TEVA)’s desirable mix of generic and patent-protected drugs, there are plenty of reasons to pay attention. Don’t forget about energy play Marathon Petroleum Corp (NYSE:MPC) too, as there’s a potential for a massive value-based appreciation in the coming months. Learn why you should track hedge fund sentiment.
Disclosure: none
