Is Diamondback Energy Inc (NASDAQ:FANG) a bargain? The smart money is taking a pessimistic view. The number of bullish hedge fund positions stayed the same which is a slightly negative development in our experience
In the 21st century investor’s toolkit, there are a multitude of gauges shareholders can use to monitor the equity markets. A duo of the most underrated are hedge fund and insider trading activity. At Insider Monkey, our studies have shown that, historically, those who follow the best picks of the top money managers can outpace their index-focused peers by a very impressive margin (see just how much).
Equally as beneficial, positive insider trading activity is a second way to parse down the stock market universe. Just as you’d expect, there are a number of stimuli for a bullish insider to sell shares of his or her company, but just one, very simple reason why they would initiate a purchase. Various empirical studies have demonstrated the impressive potential of this strategy if shareholders understand where to look (learn more here).
Now, let’s take a look at the latest action regarding Diamondback Energy Inc (NASDAQ:FANG).
How are hedge funds trading Diamondback Energy Inc (NASDAQ:FANG)?
At Q1’s end, a total of 7 of the hedge funds we track held long positions in this stock, a change of 0% from one quarter earlier. With the smart money’s capital changing hands, there exists an “upper tier” of noteworthy hedge fund managers who were upping their stakes meaningfully.
When looking at the hedgies we track, Charles Davidson’s Wexford Capital had the biggest position in Diamondback Energy Inc (NASDAQ:FANG), worth close to $440.6 million, accounting for 34.9% of its total 13F portfolio. On Wexford Capital’s heels is Driehaus Capital, managed by Richard Driehaus, which held a $2.2 million position; 0.1% of its 13F portfolio is allocated to the stock. Remaining hedgies with similar optimism include Donald Chiboucis’s Columbus Circle Investors, Arvind Sanger’s GeoSphere Capital Management and Louis Bacon’s Moore Global Investments.
Because Diamondback Energy Inc (NASDAQ:FANG) has experienced a declination in interest from hedge fund managers, it’s easy to see that there exists a select few fund managers that elected to cut their entire stakes heading into Q2. It’s worth mentioning that Matthew Hulsizer’s PEAK6 Capital Management dropped the largest position of the 450+ funds we key on, valued at an estimated $7.5 million in stock.. Barry Rosenstein’s fund, JANA Partners, also said goodbye to its stock, about $5.4 million worth. These bearish behaviors are interesting, as aggregate hedge fund interest stayed the same (this is a bearish signal in our experience).
How have insiders been trading Diamondback Energy Inc (NASDAQ:FANG)?
Insider purchases made by high-level executives is most useful when the company in question has seen transactions within the past 180 days. Over the last six-month time period, Diamondback Energy Inc (NASDAQ:FANG) has seen zero unique insiders buying, and zero insider sales (see the details of insider trades here).
Let’s also review hedge fund and insider activity in other stocks similar to Diamondback Energy Inc (NASDAQ:FANG). These stocks are Comstock Resources Inc (NYSE:CRK), QR Energy LP (NYSE:QRE), Stone Energy Corporation (NYSE:SGY), EPL Oil & Gas Inc (NYSE:EPL), and Carrizo Oil & Gas, Inc. (NASDAQ:CRZO). All of these stocks are in the independent oil & gas industry and their market caps resemble FANG’s market cap.
