Hedge Funds Aren’t Crazy About QEP Resources Inc (QEP) Anymore

To many of your fellow readers, hedge funds are assumed to be delayed, old financial vehicles of a forgotten age. Although there are more than 8,000 hedge funds with their doors open today, this site focuses on the moguls of this club, around 525 funds. Analysts calculate that this group controls the lion’s share of the smart money’s total assets, and by monitoring their highest quality equity investments, we’ve uncovered a few investment strategies that have historically outpaced the market. Our small-cap hedge fund strategy outpaced the S&P 500 index by 18 percentage points per year 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 outclassed the S&P 500 index by 33 percentage points in 11 months (find the details here).

Just as necessary, positive insider trading sentiment is another way to look at the investments you’re interested in. There are a variety of incentives for an executive to downsize shares of his or her company, but only one, very clear reason why they would initiate a purchase. Various academic studies have demonstrated the market-beating potential of this tactic if shareholders know what to do (learn more here).

Furthermore, let’s study the recent info surrounding QEP Resources Inc (NYSE:QEP).

Hedge fund activity in QEP Resources Inc (NYSE:QEP)

Heading into Q3, a total of 24 of the hedge funds we track held long positions in this stock, a change of -14% from one quarter earlier. With the smart money’s capital changing hands, there exists a select group of notable hedge fund managers who were upping their stakes considerably.

According to our 13F database, Barry Rosenstein’s JANA Partners had the most valuable position in QEP Resources Inc (NYSE:QEP), worth close to $241.8 million, accounting for 3.4% of its total 13F portfolio. Sitting at the No. 2 spot is D E Shaw, managed by D. E. Shaw, which held a $31.7 million position; 0.1% of its 13F portfolio is allocated to the company. Remaining peers with similar optimism include Steven Cohen’s SAC Capital Advisors, Daniel Lewis’s Orange Capital and Phill Gross and Robert Atchinson’s Adage Capital Management.

Since QEP Resources Inc (NYSE:QEP) has experienced declining interest from the top-tier hedge fund industry, we can see that there was a specific group of fund managers that decided to sell off their positions entirely heading into Q2. At the top of the heap, Brian Jackelow’s SAB Capital Management dumped the largest position of the 450+ funds we track, worth close to $31.8 million in stock. Jeffrey Tannenbaum’s fund, Fir Tree, also dumped its stock, about $14.3 million worth. These transactions are interesting, as aggregate hedge fund interest was cut by 4 funds heading into Q2.

What do corporate executives and insiders think about QEP Resources Inc (NYSE:QEP)?

Insider buying is best served when the company in focus has seen transactions within the past six months. Over the last half-year time period, QEP Resources Inc (NYSE:QEP) has experienced zero unique insiders buying, and zero insider sales (see the details of insider trades here).

We’ll also take a look at the relationship between both of these indicators in other stocks similar to QEP Resources Inc (NYSE:QEP). These stocks are Nabors Industries Ltd. (NYSE:NBR), Cheniere Energy, Inc. (NYSEAMEX:LNG), Helmerich & Payne, Inc. (NYSE:HP), Penn West Petroleum Ltd (USA) (NYSE:PWE), and Whiting Petroleum Corp (NYSE:WLL). This group of stocks are the members of the oil & gas drilling & exploration industry and their market caps are closest to QEP’s market cap.

Using the results shown by the previously mentioned tactics, average investors should always keep one eye on hedge fund and insider trading activity, and QEP Resources Inc (NYSE:QEP) applies perfectly to this mantra.

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