Comstock Resources Inc (NYSE:CRK) investors should be aware of a decrease in activity from the world’s largest hedge funds in recent months.
According to most shareholders, hedge funds are perceived as worthless, outdated financial vehicles of yesteryear. While there are greater than 8000 funds with their doors open at the moment, we choose to focus on the masters of this club, around 450 funds. It is widely believed that this group oversees the majority of the smart money’s total asset base, and by tracking their highest performing investments, we have uncovered a few investment strategies that have historically outperformed the market. Our small-cap hedge fund strategy beat the S&P 500 index by 18 percentage points annually for a decade in our back tests, and since we’ve started sharing our picks with our subscribers at the end of August 2012, we have trumped the S&P 500 index by 23.3 percentage points in 8 months (see all of our picks from August).
Equally as beneficial, bullish insider trading sentiment is a second way to break down the marketplace. Obviously, there are a variety of incentives for a corporate insider to drop shares of his or her company, but only one, very simple reason why they would behave bullishly. Plenty of empirical studies have demonstrated the valuable potential of this strategy if investors know where to look (learn more here).
Keeping this in mind, we’re going to take a look at the recent action regarding Comstock Resources Inc (NYSE:CRK).
How have hedgies been trading Comstock Resources Inc (NYSE:CRK)?
At Q1’s end, a total of 10 of the hedge funds we track were bullish in this stock, a change of 0% from the previous quarter. With hedge funds’ sentiment swirling, there exists an “upper tier” of notable hedge fund managers who were boosting their holdings meaningfully.
Of the funds we track, Ken Griffin’s Citadel Investment Group had the most valuable position in Comstock Resources Inc (NYSE:CRK), worth close to $16.9 million, comprising less than 0.1%% of its total 13F portfolio. On Citadel Investment Group’s heels is Israel Englander of Millennium Management, with a $14 million position; the fund has 0.1% of its 13F portfolio invested in the stock. Other hedgies that are bullish include Jim Simons’s Renaissance Technologies, D. E. Shaw’s D E Shaw and Matthew Hulsizer’s PEAK6 Capital Management.
Since Comstock Resources Inc (NYSE:CRK) has experienced a declination in interest from the smart money, we can see that there lies a certain “tier” of hedge funds who sold off their positions entirely heading into Q2. At the top of the heap, James Dondero’s Highland Capital Management sold off the largest investment of the 450+ funds we watch, comprising close to $3.6 million in stock., and Matthew Tewksbury of Stevens Capital Management was right behind this move, as the fund dropped about $0.8 million worth. These bearish behaviors are intriguing to say the least, as aggregate hedge fund interest stayed the same (this is a bearish signal in our experience).
Insider trading activity in Comstock Resources Inc (NYSE:CRK)
Insider purchases made by high-level executives is at its handiest when the company in question has experienced transactions within the past six months. Over the last six-month time frame, Comstock Resources Inc (NYSE:CRK) has experienced zero unique insiders purchasing, 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 Comstock Resources Inc (NYSE:CRK). These stocks are Sanchez Energy Corp (NYSE:SN), San Juan Basin Royalty Trust (NYSE:SJT), Resolute Energy Corp (NYSE:REN), Delek Logistics Partners LP (NYSE:DKL), and Memorial Production Partners LP (NASDAQ:MEMP). All of these stocks are in the independent oil & gas industry and their market caps are similar to CRK’s market cap.
