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 and underperformance. The time period between the end of June 2015 and the end of June 2016 was one of those periods, as the Russell 2000 ETF (IWM) has underperformed the larger S&P 500 ETF (SPY) by more than 10 percentage points. Given that the funds we track tend to have a disproportionate amount of their portfolios in smaller cap stocks, they have been underperforming the large-cap indices. However, things have dramatically changed over the last 5 months. Small-cap stocks reversed their misfortune and beat the large cap indices by almost 11 percentage points since the end of June. 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).
It’s worth mentioning that Marathon Petroleum Corp (NYSE:MPC) shareholders have witnessed an increase in hedge fund sentiment recently, as we will discuss further in this article. In addition, we will also compare Marathon Petroleum Corp to other stocks, including Cerner Corporation (NASDAQ:CERN), Baker Hughes Incorporated (NYSE:BHI), and Energy Transfer Partners LP (NYSE:ETP) to get a better sense of its popularity.
Follow Marathon Petroleum Corp (NYSE:MPC)
Follow Marathon Petroleum Corp (NYSE:MPC)
To the average investor there are dozens of methods market participants employ to grade stocks. A pair of the most innovative methods are hedge fund and insider trading interest. Our experts have shown that, historically, those who follow the best picks of the elite fund managers can outpace their index-focused peers by a solid margin (see the details here).
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Keeping this in mind, let’s take a look at the new action encompassing Marathon Petroleum Corp (NYSE:MPC).
How have hedgies been trading Marathon Petroleum Corp (NYSE:MPC)?
Heading into the fourth quarter of 2016, 53 funds followed by Insider Monkey were bullish on this stock, up by 23% over the quarter. With the smart money’s capital changing hands, there exists a select group of key hedge fund managers who were boosting their holdings significantly (or already accumulated large positions).
According to publicly available hedge fund and institutional investor holdings data compiled by Insider Monkey, Soroban Capital Partners, managed by Eric W. Mandelblatt, holds the most valuable position in Marathon Petroleum Corp (NYSE:MPC). Soroban Capital Partners has a $436 million position in the stock, comprising 2.6% of its 13F portfolio. Other funds that hold long positions contain Israel Englander’s Millennium Management and Barry Rosenstein’s JANA Partners.
As aggregate interest increased, key hedge funds have been driving this bullishness. Point State Capital established the most outsized position in Marathon Petroleum Corp (NYSE:MPC). Point State Capital had $127.6 million invested in the company at the end of the quarter. Paul Singer’s Elliott Management also initiated a $127.1 million position during the quarter. The other funds with new positions in the stock are Michael Lowenstein’s Kensico Capital, Matthew Knauer and Mina Faltas’ Nokota Management, and Paul Singer’s Elliott Management.
Let’s now take a look at hedge fund activity in other stocks – not necessarily in the same industry as Marathon Petroleum Corp (NYSE:MPC) but similarly valued. These stocks are Cerner Corporation (NASDAQ:CERN), Baker Hughes Incorporated (NYSE:BHI), Energy Transfer Partners LP (NYSE:ETP), and Ecopetrol S.A. (ADR) (NYSE:EC). This group of stocks’ market valuations resemble MPC’s market valuation.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| CERN | 25 | 873071 | 2 |
| BHI | 42 | 2644477 | -2 |
| ETP | 22 | 956722 | 0 |
| EC | 8 | 58450 | 0 |
As you can see these stocks had an average of 24 hedge funds with bullish positions and the average amount invested in these stocks was $1.13 billion, versus $2.80 billion in Marathon’s case. Baker Hughes Incorporated (NYSE:BHI) is the most popular stock in this table, while Ecopetrol S.A. (ADR) (NYSE:EC) is the least popular one with only eight bullish hedge fund positions. Compared to these stocks Marathon Petroleum Corp (NYSE:MPC) is more popular among hedge funds. Considering that hedge funds are fond of this stock in relation to its market cap peers, it may be a good idea to analyze it in detail and potentially include it in your portfolio.
