The strategy's recent performance has been bolstered by its selective exposure to energy, with Marathon Petroleum being one of the refinery names added at the start of the quarter. The manager believes that the energy sector, despite conventional views of low returns, is positioned for recovery due to the ongoing geopolitical tensions and the essential nature of fossil fuels in the global energy mix. This contrarian view, supported by capital cycle analysis, suggests that Marathon Petroleum is well-placed to benefit from improving returns on capital as the sector has been on a capital diet, leading to better discipline in capital expenditures.

Marathon Petroleum has been a top contributor to our portfolio, reflecting its strong performance and stability in cash flows. We believe that its fundamentals are robust, and it continues to generate significant free cash flow, which is a key indicator of its financial health. Our strategy focuses on companies like Marathon Petroleum that exhibit low debt levels and stable underlying cash flows, making it a valuable addition to our holdings.

Marathon Petroleum Corp. advanced strongly as the market repriced energy businesses in response to the Strait of Hormuz closure and surging oil prices. The company has focused on strong cash generation and ongoing shareholder returns, reinforcing investor willingness to hold in a heated commodity market. This operational performance and production growth have positioned Marathon favorably amidst rising energy prices.

MARATHON PETROLEUM was a top contributor to the portfolio, impacting relative returns positively by 0.58%.

We added refiner Marathon Petroleum (MPC) back to the portfolio, on attractive valuation, steadying crack spreads, and its 49% stake in high-quality MLP, MPLX LP. Strong volume at midstream/MLP subsidiary MPLX supported MPC shares, making it a relative winner amid falling oil prices. The portfolio currently offers an indicated yield of 3.0% that we project is well supported down to approximately $45/bbl oil, combined with a significantly larger variable return of capital commitment at higher commodity prices.

Marathon Petroleum had good full-year 2024 earnings, deploying capital for refinery improvements and new projects. This indicates a strong operational performance and a commitment to enhancing their infrastructure, which positions them well for future growth in the energy sector. The overall positive sentiment in the energy sector, coupled with Marathon's strategic investments, suggests a favorable outlook for the company.

Marathon Petroleum had good full-year 2024 earnings, deploying capital for refinery improvements and new projects. This indicates a strong operational performance and a commitment to enhancing their infrastructure, which positions them well for future growth in the energy sector. The overall positive sentiment in the energy sector, coupled with Marathon's strategic investments, suggests a favorable outlook for the company.

Marathon Petroleum had good full-year 2024 earnings, deploying capital for refinery improvements and new projects. This indicates a strong operational performance and a commitment to enhancing their infrastructure, which positions them well for future growth in the energy sector. The overall positive sentiment in the energy sector, coupled with Marathon's strategic investments, suggests a favorable outlook for the company.