Phillips 66 (PSX), Marathon Petroleum Corp (MPC), Valero Energy Corporation (VLO): Filling Up Your Portfolio

Hedge trade

Heading into the second quarter, a total of 48 of the hedge funds were long Phillip 66. This includes mega-billionarie Warren Buffett’s Berkshire Hathaway, with a $1.9 billion position. (Check out Buffett’s high upside picks.)

Marathon had 49 hedge funds long the stock, with D.E. Shaw having the most valuable position in the stock. D.E. Shaw’s position is worth $280 million. (Check out Shaw’s high upside picks.)

Meanwhile, Valero had the most hedge fund interest with a total of 56 of the hedge funds long the stock. Andreas Halvorsen’s Viking Global had the largest position among major hedge funds, worth some $305 million. (See Viking’s cheap stocks.)

Bottom line

The downstream oil/gas business gets little appreciation given its relatively “low” dividend yields when compared some of the major integrated oil/gas companies. However, the industry’s above-par expected growth is often overlooked.

Phillips is expected to grow EPS at an annualized 10.8% over the next five years, while its former parent ConocoPhillips (NYSE:COP) has a 3.4% expected growth rate. Meanwhile, Marathon Petroleum Corp (NYSE:MPC) is expected to grow at 11.2%, versus former parent Marathon Oil’s 5.3%.

Of the major refiners, I tend to like Valero the best, being the market leader and also having recently spun-off its retail segment — allowing the company to better focus on refining. But both Phillip and Marathon also appear to be solid bets, while Phillips has impressive output and Marathon has a strong balance sheet.

Marshall Hargrave owns shares of Marathon Petroleum. The Motley Fool has no position in any of the stocks mentioned.

The article Filling Up Your Portfolio originally appeared on Fool.com and is written by Marshall Hargrave.

Marshall is a member of The Motley Fool Blog Network — entries represent the personal opinion of the blogger and are not formally edited.

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