Did The Smart Money Get Marathon Oil Corporation (MRO) Right?

The latest 13F reporting period has come and gone, and Insider Monkey have plowed through 867 13F filings that hedge funds and well-known value investors are required to file by the SEC. The 13F filings show the funds’ and investors’ portfolio positions as of September 30th, when the S&P 500 Index was trading around the 4300 level. Since then investors decided to bet on the economic recovery and a stock market rebound even though we experienced a temporary correction in January. In this article you are going to find out whether hedge funds thought Marathon Oil Corporation (NYSE:MRO) was a good investment heading into the fourth quarter and how the stock traded in comparison to the top hedge fund picks.

Is Marathon Oil Corporation (NYSE:MRO) a buy, sell, or hold? Money managers were betting on the stock. The number of long hedge fund positions inched up by 6 lately. Marathon Oil Corporation (NYSE:MRO) was in 40 hedge funds’ portfolios at the end of the third quarter of 2021. The all time high for this statistic was previously 39. This means the bullish number of hedge fund positions in this stock currently sits at its all time high. Our calculations also showed that MRO isn’t among the 30 most popular stocks among hedge funds (click for Q3 rankings). There were 34 hedge funds in our database with MRO holdings at the end of June.

At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, lithium prices have more than doubled over the past year, so 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. Keeping this in mind let’s take a look at the new hedge fund action surrounding Marathon Oil Corporation (NYSE:MRO).

Paul Tudor Jones of Tudor Investment Corp

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

At the end of September, a total of 40 of the hedge funds tracked by Insider Monkey were long this stock, a change of 18% from the second quarter of 2021. On the other hand, there were a total of 16 hedge funds with a bullish position in MRO a year ago. With hedge funds’ positions undergoing their usual ebb and flow, there exists a select group of notable hedge fund managers who were increasing their holdings considerably (or already accumulated large positions).

Among these funds, D E Shaw held the most valuable stake in Marathon Oil Corporation (NYSE:MRO), which was worth $144.1 million at the end of the third quarter. On the second spot was Millennium Management which amassed $117.9 million worth of shares. Holocene Advisors, Fisher Asset Management, and Citadel Investment Group were also very fond of the stock, becoming one of the largest hedge fund holders of the company. In terms of the portfolio weights assigned to each position SIR Capital Management allocated the biggest weight to Marathon Oil Corporation (NYSE:MRO), around 4.35% of its 13F portfolio. Arosa Capital Management is also relatively very bullish on the stock, dishing out 1.52 percent of its 13F equity portfolio to MRO.

Consequently, some big names were breaking ground themselves. Laurion Capital Management, managed by Benjamin A. Smith, created the most valuable position in Marathon Oil Corporation (NYSE:MRO). Laurion Capital Management had $19.3 million invested in the company at the end of the quarter. Till Bechtolsheimer’s Arosa Capital Management also initiated a $8.2 million position during the quarter. The following funds were also among the new MRO investors: Joe DiMenna’s ZWEIG DIMENNA PARTNERS, Paul Tudor Jones’s Tudor Investment Corp, and Steve Pattyn’s Yaupon Capital.

Let’s go over hedge fund activity in other stocks – not necessarily in the same industry as Marathon Oil Corporation (NYSE:MRO) but similarly valued. These stocks are Teva Pharmaceutical Industries Limited (NYSE:TEVA), Booz Allen Hamilton Holding Corporation (NYSE:BAH), StoneCo Ltd. (NASDAQ:STNE), Builders FirstSource, Inc. (NYSE:BLDR), American Financial Group, Inc. (NYSE:AFG), Henry Schein, Inc. (NASDAQ:HSIC), and Dicks Sporting Goods Inc (NYSE:DKS). This group of stocks’ market caps match MRO’s market cap.

View table here if you experience formatting issues.

As you can see these stocks had an average of 32.1 hedge funds with bullish positions and the average amount invested in these stocks was $1274 million. That figure was $903 million in MRO’s case. Builders FirstSource, Inc. (NYSE:BLDR) is the most popular stock in this table. On the other hand Teva Pharmaceutical Industries Limited (NYSE:TEVA) is the least popular one with only 22 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 69. 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 29.6% in 2021 and still beat the market by 3.6 percentage points. Hedge funds were also right about betting on MRO as the stock returned 42.9% since the end of Q3 (through 1/31) and outperformed the market. Hedge funds were rewarded for their relative bullishness.

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