Hedge Funds Are Selling HollyFrontier Corp (HFC)

HollyFrontier Corp (NYSE:HFC) has experienced a decrease in activity from the world’s largest hedge funds lately.

If you’d ask most traders, hedge funds are viewed as unimportant, old investment vehicles of years past. While there are more than 8000 funds in operation at the moment, we choose to focus on the moguls of this club, close to 450 funds. Most estimates calculate that this group has its hands on the majority of the smart money’s total capital, and by tracking their best equity investments, we have determined a few investment strategies that have historically outperformed Mr. Market. Our small-cap hedge fund strategy beat the S&P 500 index by 18 percentage points per year for a decade in our back tests, and since we’ve began to sharing our picks with our subscribers at the end of August 2012, we have outperformed the S&P 500 index by 23.3 percentage points in 8 months (explore the details and some picks here).

Just as important, bullish insider trading activity is another way to break down the financial markets. Obviously, there are plenty of motivations for a bullish insider to sell shares of his or her company, but only one, very obvious reason why they would buy. Plenty of academic studies have demonstrated the market-beating potential of this method if “monkeys” understand what to do (learn more here).

Keeping this in mind, it’s important to take a glance at the key action regarding HollyFrontier Corp (NYSE:HFC).

How are hedge funds trading HollyFrontier Corp (NYSE:HFC)?

At Q1’s end, a total of 34 of the hedge funds we track were bullish in this stock, a change of -13% from the previous quarter. With hedge funds’ capital changing hands, there exists a few key hedge fund managers who were upping their holdings meaningfully.

When looking at the hedgies we track, Point State Capital, managed by Sean Cullinan, holds the largest position in HollyFrontier Corp (NYSE:HFC). Point State Capital has a $178.3 million position in the stock, comprising 2.6% of its 13F portfolio. On Point State Capital’s heels is Jim Simons of Renaissance Technologies, with a $152 million position; the fund has 0.4% of its 13F portfolio invested in the stock. Some other hedgies with similar optimism include D. E. Shaw’s D E Shaw, Cliff Asness’s AQR Capital Management and John Overdeck and David Siegel’s Two Sigma Advisors.

Due to the fact that HollyFrontier Corp (NYSE:HFC) has experienced falling interest from the aggregate hedge fund industry, it’s easy to see that there lies a certain “tier” of hedgies who sold off their full holdings last quarter. Intriguingly, John Burbank’s Passport Capital dumped the biggest position of all the hedgies we watch, worth an estimated $55 million in stock., and Ric Dillon of Diamond Hill Capital was right behind this move, as the fund sold off about $49 million worth. These transactions are interesting, as aggregate hedge fund interest dropped by 5 funds last quarter.

How are insiders trading HollyFrontier Corp (NYSE:HFC)?

Insider purchases made by high-level executives is particularly usable when the primary stock in question has experienced transactions within the past half-year. Over the last six-month time period, HollyFrontier Corp (NYSE:HFC) has experienced 1 unique insiders purchasing, and 6 insider sales (see the details of insider trades here).

Let’s also examine hedge fund and insider activity in other stocks similar to HollyFrontier Corp (NYSE:HFC). These stocks are Marathon Oil Corporation (NYSE:MRO), Access Midstream Partners LP (NYSE:ACMP), Ultrapar Participacoes SA (ADR) (NYSE:UGP), Tesoro Corporation (NYSE:TSO), and Murphy Oil Corporation (NYSE:MUR). All of these stocks are in the oil & gas refining & marketing industry and their market caps match HFC’s market cap.