Contango Oil & Gas Company (MCF): Insiders and Hedge Funds Aren’t Crazy About It

In the financial world, there are tons of gauges market participants can use to track the equity markets. A couple of the most useful are hedge fund and insider trading interest. At Insider Monkey, our research analyses have shown that, historically, those who follow the top picks of the best fund managers can outpace the market by a healthy amount (see just how much).

Equally as crucial, optimistic insider trading sentiment is another way to analyze the investments you’re interested in. Obviously, there are a number of incentives for an upper level exec to sell shares of his or her company, but just one, very obvious reason why they would buy. Plenty of empirical studies have demonstrated the market-beating potential of this tactic if shareholders know what to do (learn more here).

What’s more, it’s important to examine the newest info surrounding Contango Oil & Gas Company (NYSEAMEX:MCF).

What does the smart money think about Contango Oil & Gas Company (NYSEAMEX:MCF)?

Heading into Q3, a total of 8 of the hedge funds we track held long positions in this stock, a change of 0% from one quarter earlier. With hedge funds’ sentiment swirling, there exists a select group of key hedge fund managers who were boosting their stakes meaningfully.

Out of the hedge funds we follow, John W. Rogers’s Ariel Investments had the largest position in Contango Oil & Gas Company (NYSEAMEX:MCF), worth close to $98.9 million, accounting for 1.6% of its total 13F portfolio. Coming in second is PEAK6 Capital Management, managed by Matthew Hulsizer, which held a $10.2 million call position; the fund has less than 0.1%% of its 13F portfolio invested in the stock. Remaining hedgies that are bullish include Ric Dillon’s Diamond Hill Capital, Chuck Royce’s Royce & Associates and Ken Griffin’s Citadel Investment Group.

As Contango Oil & Gas Company (NYSEAMEX:MCF) has faced dropping sentiment from upper-tier hedge fund managers, it’s easy to see that there exists a select few funds that slashed their full holdings heading into Q2. Intriguingly, Brian Bares’s Bares Capital Management dropped the largest position of all the hedgies we track, worth close to $0.6 million in stock. Matthew Hulsizer’s fund, PEAK6 Capital Management, also dropped its stock, about $0.5 million worth. These moves are important to note, as total hedge fund interest stayed the same (this is a bearish signal in our experience).

How are insiders trading Contango Oil & Gas Company (NYSEAMEX:MCF)?

Insider buying made by high-level executives is most useful when the company in question has seen transactions within the past 180 days. Over the last half-year time frame, Contango Oil & Gas Company (NYSEAMEX:MCF) has experienced zero unique insiders buying, and zero insider sales (see the details of insider trades here).

We’ll also examine the relationship between both of these indicators in other stocks similar to Contango Oil & Gas Company (NYSEAMEX:MCF). These stocks are Permian Basin Royalty Trust (NYSE:PBT), Swift Energy Company (NYSE:SFY), Midstates Petroleum Company Inc (NYSE:MPO), TransGlobe Energy Corporation (USA) (NASDAQ:TGA), and Forest Oil Corporation (NYSE:FST). This group of stocks are in the independent oil & gas industry and their market caps match MCF’s market cap.

Using the returns explained by the previously mentioned studies, average investors should always pay attention to hedge fund and insider trading sentiment, and Contango Oil & Gas Company (NYSEAMEX:MCF) is no exception.

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