Hedge Funds Are Piling Into Marathon Oil Corporation (MRO)

·5 min read

Insider Monkey has processed numerous 13F filings of hedge funds and successful value investors to create an extensive database of hedge fund holdings. The 13F filings show the hedge funds' and successful investors' positions as of the end of the third quarter. You can find articles about an individual hedge fund's trades on numerous financial news websites. However, in this article we will take a look at their collective moves over the last 6 years and analyze what the smart money thinks of Marathon Oil Corporation (NYSE:MRO) based on that data.

Is Marathon Oil Corporation (NYSE:MRO) the right pick for your portfolio? The smart money was becoming more confident. The number of bullish hedge fund bets inched up by 6 recently. 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 we're going to take a look at the new hedge fund action encompassing Marathon Oil Corporation (NYSE:MRO).


Ken Fisher of Fisher Asset Management

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

Heading into the fourth quarter of 2021, a total of 40 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 18% from one quarter earlier. The graph below displays the number of hedge funds with bullish position in MRO over the last 25 quarters. With hedge funds' capital changing hands, there exists an "upper tier" of noteworthy 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, designating 1.52 percent of its 13F equity portfolio to MRO.

Consequently, specific money managers have been driving this bullishness. Laurion Capital Management, managed by Benjamin A. Smith, assembled 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 made a $8.2 million investment in the stock during the quarter. The other funds with brand new MRO positions are Joe DiMenna's ZWEIG DIMENNA PARTNERS, Paul Tudor Jones's Tudor Investment Corp, and Steve Pattyn's Yaupon Capital.

Let's check out hedge fund activity in other stocks similar to Marathon Oil Corporation (NYSE:MRO). We will take a look at 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). All of these stocks' market caps match MRO's market cap.

[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position TEVA,22,950696,0 BAH,23,198716,-6 STNE,37,2215793,-7 BLDR,53,2213103,-7 AFG,23,239662,4 HSIC,31,1483481,-8 DKS,36,1615509,0 Average,32.1,1273851,-3.4 [/table]

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 28.6% in 2021 through November 30th and still beat the market by 5.6 percentage points. Hedge funds were also right about betting on MRO as the stock returned 13.7% since the end of Q3 (through 11/30) 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.

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