Investing in small cap stocks has historically been a way to outperform the market, as small cap companies typically grow faster on average than the blue chips. That outperformance comes with a price, however, as there are occasional periods of higher volatility. The time period between June 25 and the end of October was one of those periods, as the Russell 2000 ETF (IWM) has underperformed the larger S&P 500 ETF (SPY) by more than 14 percentage points. Given that the funds we track tend to have a disproportionate amount of their portfolios in smaller cap stocks, they have seen some volatility in their portfolios too. Actually their moves are potentially one of the factors that contributed to this volatility. In this article, we use our extensive database of hedge fund holdings to find out what the smart money thinks of Marathon Petroleum Corp (NYSE:MPC).
Is Marathon Petroleum Corp a buy right now? Prominent investors are reducing their bets on the stock. The number of long hedge fund bets was trimmed by 2 lately. MPC was in 46 hedge funds’ portfolios at the end of the third quarter of 2015. There were 48 hedge funds in our database with MPC positions at the end of the previous quarter. The level and the change in hedge fund popularity aren’t the only variables you need to analyze to decipher hedge funds’ perspectives. A stock may witness a boost in popularity, but it may still be less popular than similarly priced stocks. That’s why at the end of this article we will examine companies such as Aon PLC (NYSE:AON), LinkedIn Corp (NYSE:LNKD), and Intuit Inc. (NASDAQ:INTU) to gather more data points.
Today there are plenty of methods that stock traders use to appraise their stock investments. A duo of the most useful methods are hedge fund and insider trading signals. Our experts have shown that, historically, those who follow the top picks of the top investment managers can trounce their index-focused peers by a healthy amount (see the details here).
Now, we’re going to analyze the new action surrounding Marathon Petroleum Corp (NYSE:MPC).
What have hedge funds been doing with Marathon Petroleum Corp (NYSE:MPC)?
At the end of the third quarter, a total of 46 of the hedge funds tracked by Insider Monkey were long this stock, a change of -4% from one quarter earlier. With hedgies’ positions undergoing their usual ebb and flow, there exists a select group of noteworthy hedge fund managers who were upping their stakes meaningfully (or already accumulated large positions).
Of the funds tracked by Insider Monkey, D. E. Shaw’s D E Shaw has the largest position in Marathon Petroleum Corp (NYSE:MPC), worth close to $989.5 million, comprising 1.5% of its total 13F portfolio. The second most bullish fund manager is AQR Capital Management, managed by Cliff Asness, which holds a $377.3 million position; 0.8% of its 13F portfolio is allocated to the company. Other members of the smart money that are bullish contain Alan Fournier’s Pennant Capital Management, John Griffin’s Blue Ridge Capital and John Overdeck and David Siegel’s Two Sigma Advisors.
Since Marathon Petroleum Corp (NYSE:MPC) has faced a declination in interest from the entirety of the hedge funds we track, it’s easy to see that there exists a select few fund managers who were dropping their entire stakes last quarter. It’s worth mentioning that Robert Pohly’s Samlyn Capital said goodbye to the largest position of the 700 funds monitored by Insider Monkey, totaling about $106.6 million in stock, and David Greenspan’s Slate Path Capital was right behind this move, as the fund dropped about $94.2 million worth. These bearish behaviors are interesting, as total hedge fund interest fell by 2 funds last quarter.
Let’s now review hedge fund activity in other stocks – not necessarily in the same industry as Marathon Petroleum Corp (NYSE:MPC) but similarly valued. These stocks are Aon PLC (NYSE:AON), LinkedIn Corp (NYSE:LNKD), Intuit Inc. (NASDAQ:INTU), and Constellation Brands, Inc. (NYSE:STZ). All of these stocks’ market caps match MPC’s market cap.
|Ticker||No of HFs with positions||Total Value of HF Positions (x1000)||Change in HF Position|
As you can see these stocks had an average of 42 hedge funds with bullish positions and the average amount invested in these stocks was $2.66 billion. That figure was $2.49 billion in MPC’s case. Constellation Brands, Inc. (NYSE:STZ) is the most popular stock in this table, while Intuit Inc. (NASDAQ:INTU) is the least popular one with only 32 bullish hedge fund positions. Marathon Petroleum Corp (NYSE:MPC) is not the most popular stock in this group, but hedge fund interest is still above average. This is a slightly positive signal, but we’d rather spend our time researching stocks that hedge funds are piling on. In this regard STZ might be a better candidate to consider a long position.