Here is What Hedge Funds Think About Laredo Petroleum Inc (LPI)

At Insider Monkey, we pore over the filings of more than 700 top investment firms every quarter, a process we have now completed for the latest reporting period. The data we’ve gathered as a result gives us access to a wealth of collective knowledge based on these firms’ portfolio holdings as of September 30. In this article, we will use that wealth of knowledge to determine whether or not Laredo Petroleum Holdings Inc (NYSE:LPI) makes for a good investment right now.

Laredo Petroleum Holdings Inc (NYSE:LPI) investors should be aware of a decrease in the hedge fund interest of late. LPI was in 20 hedge funds’ portfolios at the end of September. There were 23 hedge funds in our database with LPI holdings at the end of the previous quarter. The level and the change in hedge fund popularity aren’t the only variables you need to analyze to decipher hedge funds’ perspectives. A stock may witness a boost in popularity, but it may still be less popular than similarly priced stocks. That’s why at the end of this article we will examine companies such as BofI Holding, Inc. (NASDAQ:BOFI), Owens & Minor, Inc. (NYSE:OMI), and Cirrus Logic, Inc. (NASDAQ:CRUS) to gather more data points.

At the moment there are plenty of tools market participants have at their disposal to size up stocks. A couple of the most useful tools are hedge fund and insider trading interest. We have shown that, historically, those who follow the best picks of the best investment managers can outclass the broader indices by a very impressive margin (see the details here).

With all of this in mind, let’s analyze the latest action encompassing Laredo Petroleum Holdings Inc (NYSE:LPI).

What have hedge funds been doing with Laredo Petroleum Holdings Inc (NYSE:LPI)?

At the Q3’s end, a total of 20 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -13% from the previous quarter. With hedge funds’ capital changing hands, there exists an “upper tier” of noteworthy hedge fund managers who were boosting their stakes substantially (or already accumulated large positions).

According to Insider Monkey’s hedge fund database, John H. Scully’s SPO Advisory Corp has the biggest position in Laredo Petroleum Holdings Inc (NYSE:LPI), worth close to $161.5 million, corresponding to 2.7% of its total 13F portfolio. The second most bullish fund is Encompass Capital Advisors, led by Todd J. Kantor, holding an $22.8 million position; the fund has 4.2% of its 13F portfolio invested in the stock. Remaining professional money managers that hold long positions comprise Gilchrist Berg’s Water Street Capital, Gregory Fraser, Rudolph Kluiber, and Timothy Krochuk’s GRT Capital Partners and Dmitry Balyasny’s Balyasny Asset Management.

Judging by the fact that Laredo Petroleum Holdings Inc (NYSE:LPI) has faced bearish sentiment from the entirety of the hedge funds we track, logic holds that there is a sect of fund managers that elected to cut their positions entirely heading into Q4. At the top of the heap, Kevin D. Eng’s Columbus Hill Capital Management cut the biggest investment of the 700 funds followed by Insider Monkey, totaling close to $10.4 million in call options., and Sander Gerber’s Hudson Bay Capital Management was right behind this move, as the fund sold off about $4.7 million worth. These moves are important to note, as total hedge fund interest dropped by 3 funds heading into Q4.

Let’s now take a look at hedge fund activity in other stocks – not necessarily in the same industry as Laredo Petroleum Holdings Inc (NYSE:LPI) but similarly valued. These stocks are BofI Holding, Inc. (NASDAQ:BOFI), Owens & Minor, Inc. (NYSE:OMI), Cirrus Logic, Inc. (NASDAQ:CRUS), and Cousins Properties Inc (NYSE:CUZ). All of these stocks’ market caps are similar to LPI’s market cap.

As you can see these stocks had an average of 20 hedge funds with bullish positions and the average amount invested in these stocks was $147 million, compared to $227 million in LPI’s case. Cirrus Logic, Inc. (NASDAQ:CRUS) is the most popular stock in this table. On the other hand BofI Holding, Inc. (NASDAQ:BOFI) is the least popular one with only 13 bullish hedge fund positions. Laredo Petroleum Holdings Inc (NYSE:LPI) is not the most popular stock in this group, but hedge fund interest is still above average. This is a slightly positive signal, but we’d rather spend our time researching stocks that hedge funds are piling on. In this regard CRUS might be a better candidate to consider a long position.