Investing

CEO Chops Marathon Petroleum Stake by a Third

Trey Thoelcke

Published: February 22, 2024 1:30 pm

Investors can learn a lot by paying attention to the behavior of corporate insiders as they handle positions in their own companies. Insiders may sell shares for many reasons (such as buying a house, paying for college, or retirement planning). They generally only buy for one reason: they believe they will make more money.

Often, one of the largest and best-informed shareholders in any company is the chief executive officer. Let’s see whether Marathon Petroleum Corp. (NYSE: MPC) CEO Michael Hennigan has been increasing or decreasing his shares over the past year and whether he knows something we don’t.

What You Need to Know About Marathon Petroleum

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Marathon Petroleum operates as an integrated downstream energy company primarily in the United States. It operates in two segments.

The Refining & Marketing segment refines crude oil and other feedstocks at its refineries in the Gulf Coast, Mid-Continent, and West Coast regions of the United States. It purchases refined products and ethanol for resale and distributes refined products, including renewable diesel, through transportation, storage, distribution, and marketing services. Its refined products include transportation fuels, such as reformulated gasolines and blend-grade gasolines, heavy fuel oil, and asphalt. This segment also manufactures propane, petrochemicals, and natural gas liquids. It sells refined products to wholesale marketing customers in the United States and internationally, buyers on the spot market, and independent entrepreneurs who operate primarily Marathon branded outlets, as well as through long-term fuel supply contracts to direct dealer locations primarily under the ARCO brand. (See which 11 motor oil brands you should never use.)

The Midstream segment transports, stores, distributes, and markets crude oil and refined products through refining logistics assets, pipelines, terminals, towboats, and barges. It also gathers, processes, and transports natural gas, and it gathers, transports, fractionates, stores, and markets natural gas liquids.

The company was founded in 1887 and is headquartered in Findlay, Ohio. Among its competitors are Phillips 66 (NYSE: PSX) and Valero Energy Corp. (NYSE: VLO). Hennigan has been president and chief executive at Marathon since 2020.

The company posted annual revenue of over $152.7 billion and has a market capitalization near $62.6 billion. Shares recently hit a multiyear high of $173.33. The stock is up more than 14% year to date and almost 39% higher than a year ago. The Dow Jones industrial average’s gain in the past year is less than 15%.

How Marathon Petroleum’s CEO Is Trading

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One year ago, Hennigan owned around 323,600 shares, worth about $32.1 million. On last look, he owed around 216,000 shares. Yet, despite reducing the stake by about a third, its value increased about 3% to over $33.1 million as the share price has increased.

As mentioned, CEO Michael Hennigan might have sold shares for many reasons, and taking some cash while shares are hitting new highs certainly could be one reason. But is it fair to interpret that as a lack of confidence that the shares will keep climbing? Big hikes in the dividend in the past couple of years suggest that management is satisfied with the company’s prospects. Analysts on average recommend buying shares, though the stock’s recent run has the share price approaching their consensus price target. Keep an eye out for any target price updates.

Other insiders to watch include Chief Financial Officer Maryann Mannen. Her stake was worth almost $13.8 million on last look. General Counsel Suzanne Gagle has a stake worth more than $7.0 million.