To most market participants, hedge funds are perceived as worthless, old investment vehicles of the past. While there are over 8000 funds in operation at the moment, we look at the top tier of this group, close to 450 funds. It is estimated that this group controls most of all hedge funds’ total capital, and by monitoring their top stock picks, we have deciphered a few investment strategies that have historically beaten the S&P 500 index. Our small-cap hedge fund strategy outperformed the S&P 500 index by 18 percentage points annually 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 trumped the S&P 500 index by 24 percentage points in 7 months (explore the details and some picks here).
Just as beneficial, positive insider trading activity is another way to parse down the investments you’re interested in. There are a variety of motivations for an upper level exec to downsize shares of his or her company, but just one, very obvious reason why they would initiate a purchase. Various empirical studies have demonstrated the valuable potential of this strategy if shareholders understand what to do (learn more here).
With these “truths” under our belt, we’re going to take a peek at the recent action regarding Lone Pine Resources Inc (NYSE:LPR).
What does the smart money think about Lone Pine Resources Inc (NYSE:LPR)?
In preparation for this year, a total of 9 of the hedge funds we track were bullish in this stock, a change of -10% from one quarter earlier. With hedgies’ capital changing hands, there exists a few key hedge fund managers who were increasing their holdings significantly.
Of the funds we track, Owl Creek Asset Management, managed by Jeffrey Altman, holds the most valuable position in Lone Pine Resources Inc (NYSE:LPR). Owl Creek Asset Management has a $7.5 million position in the stock, comprising 0.2% of its 13F portfolio. Sitting at the No. 2 spot is Keith Meister of Corvex Capital, with a $4.8 million position; 0.2% of its 13F portfolio is allocated to the company. Some other hedgies with similar optimism include Ryan Schaper’s Point Lobos Capital, D. E. Shaw’s D E Shaw and Jim Simons’s Renaissance Technologies.
Judging by the fact that Lone Pine Resources Inc (NYSE:LPR) has witnessed a declination in interest from the entirety of the hedge funds we track, it’s easy to see that there exists a select few funds that elected to cut their positions entirely last quarter. It’s worth mentioning that Israel Englander’s Millennium Management sold off the largest position of the “upper crust” of funds we key on, worth about $0.3 million in stock.. Ric Dillon’s fund, Diamond Hill Capital, also dropped its stock, about $0.3 million worth. These moves are important to note, as total hedge fund interest was cut by 1 funds last quarter.
Insider trading activity in Lone Pine Resources Inc (NYSE:LPR)
Insider buying is at its handiest when the company in question has seen transactions within the past six months. Over the latest half-year time period, Lone Pine Resources Inc (NYSE:LPR) has experienced zero unique insiders buying, and zero insider sales (see the details of insider trades here).
Let’s also examine hedge fund and insider activity in other stocks similar to Lone Pine Resources Inc (NYSE:LPR). These stocks are Crimson Exploration Inc. (NASDAQ:CXPO), Saratoga Resources, Inc. (NYSEAMEX:SARA), Gastar Exploration Limited (USA) (NYSEAMEX:GST), and CAMAC Energy Inc (NYSEAMEX:CAK). All of these stocks are in the independent oil & gas industry and their market caps are closest to LPR’s market cap.
| Company Name | # of Hedge Funds | # of Insiders Buying | # of Insiders Selling |
| Crimson Exploration Inc. (NASDAQ:CXPO) | 4 | 0 | 0 |
| Saratoga Resources, Inc. (NYSEAMEX:SARA) | 1 | 0 | 1 |
| Gastar Exploration Limited (USA) (NYSEAMEX:GST) | 5 | 0 | 0 |
| CAMAC Energy Inc (NYSEAMEX:CAK) | 2 | 1 | 1 |
With the returns shown by the aforementioned research, retail investors should always monitor hedge fund and insider trading sentiment, and Lone Pine Resources Inc (NYSE:LPR) applies perfectly to this mantra.
