Hedge Funds Are Buying Diamond Offshore Drilling Inc (DO)

Diamond Offshore Drilling Inc (NYSE:DO) shareholders have witnessed an increase in enthusiasm from smart money of late.

At the moment, there are a multitude of gauges market participants can use to monitor Mr. Market. Some of the most under-the-radar are hedge fund and insider trading movement. At Insider Monkey, our research analyses have shown that, historically, those who follow the best picks of the elite investment managers can outpace the market by a very impressive amount (see just how much).

Just as integral, bullish insider trading activity is a second way to break down the investments you’re interested in. As the old adage goes: there are a number of stimuli for an upper level exec to drop shares of his or her company, but just one, very obvious reason why they would initiate a purchase. Various academic studies have demonstrated the impressive potential of this strategy if shareholders know what to do (learn more here).

With these “truths” under our belt, it’s important to take a gander at the latest action regarding Diamond Offshore Drilling Inc (NYSE:DO).

How have hedgies been trading Diamond Offshore Drilling Inc (NYSE:DO)?

At the end of the first quarter, a total of 17 of the hedge funds we track held long positions in this stock, a change of 13% from the previous quarter. With hedge funds’ positions undergoing their usual ebb and flow, there exists a select group of key hedge fund managers who were upping their stakes substantially.

Of the funds we track, Renaissance Technologies, managed by Jim Simons, holds the most valuable position in Diamond Offshore Drilling Inc (NYSE:DO). Renaissance Technologies has a $171.1 million position in the stock, comprising 0.4% of its 13F portfolio. Sitting at the No. 2 spot is David Harding of Winton Capital Management, with a $16.6 million position; the fund has 0.3% of its 13F portfolio invested in the stock. Other peers that hold long positions include Charles Clough’s Clough Capital Partners, Cliff Asness’s AQR Capital Management and Ken Griffin’s Citadel Investment Group.

As industrywide interest jumped, specific money managers have been driving this bullishness. Millennium Management, managed by Israel Englander, initiated the most outsized position in Diamond Offshore Drilling Inc (NYSE:DO). Millennium Management had 1.8 million invested in the company at the end of the quarter. Ken Gray and Steve Walsh’s Bryn Mawr Capital also initiated a $1.5 million position during the quarter. The following funds were also among the new DO investors: John Overdeck and David Siegel’s Two Sigma Advisors and Ray Dalio’s Bridgewater Associates.

How are insiders trading Diamond Offshore Drilling Inc (NYSE:DO)?

Bullish insider trading is most useful when the company in focus has seen transactions within the past six months. Over the latest 180-day time period, Diamond Offshore Drilling Inc (NYSE:DO) has experienced zero unique insiders buying, and 1 insider sales (see the details of insider trades here).

Let’s check out hedge fund and insider activity in other stocks similar to Diamond Offshore Drilling Inc (NYSE:DO). These stocks are ENSCO PLC (NYSE:ESV), Cheniere Energy, Inc. (NYSEAMEX:LNG), Markwest Energy Partners LP (NYSE:MWE), Concho Resources Inc. (NYSE:CXO), and Noble Corporation (NYSE:NE). All of these stocks are in the oil & gas drilling & exploration industry and their market caps match DO’s market cap.