Plains All American Pipeline, L.P. (NYSE:PAA) has experienced a decrease in hedge fund sentiment lately.
To most market participants, hedge funds are assumed to be worthless, old financial tools of the past. While there are over 8000 funds in operation at present, we hone in on the leaders of this group, about 450 funds. Most estimates calculate that this group oversees the majority of the hedge fund industry’s total capital, and by keeping an eye on their highest performing picks, we have identified a number of investment strategies that have historically beaten the S&P 500 index. Our small-cap hedge fund strategy outstripped 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 beaten the S&P 500 index by 24 percentage points in 7 months (see all of our picks from August).
Just as important, bullish insider trading sentiment is another way to parse down the stock market universe. Obviously, there are lots of stimuli for a bullish insider to sell shares of his or her company, but only one, very simple reason why they would behave bullishly. Various empirical studies have demonstrated the valuable potential of this method if you understand what to do (learn more here).
Consequently, let’s take a gander at the latest action surrounding Plains All American Pipeline, L.P. (NYSE:PAA).
How are hedge funds trading Plains All American Pipeline, L.P. (NYSE:PAA)?
At the end of the fourth quarter, a total of 9 of the hedge funds we track were bullish in this stock, a change of -18% from the previous quarter. With hedge funds’ positions undergoing their usual ebb and flow, there exists an “upper tier” of noteworthy hedge fund managers who were boosting their stakes considerably.
According to our comprehensive database, Renaissance Technologies, managed by Jim Simons, holds the most valuable position in Plains All American Pipeline, L.P. (NYSE:PAA). Renaissance Technologies has a $45.7 million position in the stock, comprising 0.1% of its 13F portfolio. Coming in second is Richard Driehaus of Driehaus Capital, with a $18.9 million position; 0.7% of its 13F portfolio is allocated to the stock. Remaining hedge funds that are bullish include Michael Messner’s Seminole Capital (Investment Mgmt), Chuck Royce’s Royce & Associates and Russell Lucas’s Lucas Capital Management.
Seeing as Plains All American Pipeline, L.P. (NYSE:PAA) has experienced falling interest from the aggregate hedge fund industry, logic holds that there exists a select few hedgies that slashed their entire stakes in Q4. Intriguingly, Dwight Anderson’s Ospraie Management cut the biggest investment of all the hedgies we monitor, worth close to $1.6 million in stock.. Peter J. Eichler Jr.’s fund, Aletheia Research and Management, also said goodbye to its stock, about $0.3 million worth. These moves are important to note, as total hedge fund interest fell by 2 funds in Q4.
How have insiders been trading Plains All American Pipeline, L.P. (NYSE:PAA)?
Bullish insider trading is particularly usable when the company we’re looking at has seen transactions within the past six months. Over the latest 180-day time frame, Plains All American Pipeline, L.P. (NYSE:PAA) has seen zero unique insiders buying, and zero insider sales (see the details of insider trades here).
Let’s check out hedge fund and insider activity in other stocks similar to Plains All American Pipeline, L.P. (NYSE:PAA). These stocks are Oneok Partners LP (NYSE:OKS), Williams Companies, Inc. (NYSE:WMB), Energy Transfer Partners LP (NYSE:ETP), Energy Transfer Equity, L.P. (NYSE:ETE), and Spectra Energy Corp. (NYSE:SE). All of these stocks are in the oil & gas pipelines industry and their market caps are closest to PAA’s market cap.
| Company Name | # of Hedge Funds | # of Insiders Buying | # of Insiders Selling |
| Oneok Partners LP (NYSE:OKS) | 5 | 1 | 0 |
| Williams Companies, Inc. (NYSE:WMB) | 41 | 1 | 4 |
| Energy Transfer Partners LP (NYSE:ETP) | 12 | 0 | 0 |
| Energy Transfer Equity, L.P. (NYSE:ETE) | 12 | 1 | 0 |
| Spectra Energy Corp. (NYSE:SE) | 13 | 0 | 5 |
With the returns exhibited by the aforementioned tactics, everyday investors should always keep an eye on hedge fund and insider trading sentiment, and Plains All American Pipeline, L.P. (NYSE:PAA) shareholders fit into this picture quite nicely.
