Is Contango Oil & Gas Company (MCF) Going to Burn These Hedge Funds? – Swift Energy Company (SFY), Midstates Petroleum Company Inc (MPO)

Contango Oil & Gas Company (NYSEAMEX:MCF) investors should be aware of a decrease in support from the world’s most elite money managers lately.

If you’d ask most investors, hedge funds are assumed to be worthless, old financial tools of yesteryear. While there are greater than 8000 funds trading today, we at Insider Monkey hone in on the bigwigs of this group, around 450 funds. Most estimates calculate that this group oversees the majority of all hedge funds’ total capital, and by paying attention to their top stock picks, we have determined a number of investment strategies that have historically outperformed the market. Our small-cap hedge fund strategy outpaced the S&P 500 index by 18 percentage points per annum 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 24 percentage points in 7 months (see all of our picks from August).

Equally as beneficial, optimistic insider trading sentiment is a second way to parse down the marketplace. Obviously, there are a number of motivations for an executive to cut shares of his or her company, but just one, very simple reason why they would behave bullishly. Several academic studies have demonstrated the useful potential of this tactic if “monkeys” understand what to do (learn more here).

Keeping this in mind, we’re going to take a look at the key action encompassing Contango Oil & Gas Company (NYSEAMEX:MCF).

What does the smart money think about Contango Oil & Gas Company (NYSEAMEX:MCF)?

At the end of the fourth quarter, a total of 9 of the hedge funds we track were long in this stock, a change of -31% from the third quarter. With the smart money’s positions undergoing their usual ebb and flow, there exists an “upper tier” of notable hedge fund managers who were upping their stakes meaningfully.

When looking at the hedgies we track, Ariel Investments, managed by John W. Rogers, holds the largest position in Contango Oil & Gas Company (NYSEAMEX:MCF). Ariel Investments has a $111.2 million position in the stock, comprising 2.3% of its 13F portfolio. Coming in second is Ken Griffin of Citadel Investment Group, with a $5.8 million position; less than 0.1%% of its 13F portfolio is allocated to the company. Some other peers with similar optimism include Chuck Royce’s Royce & Associates, Jim Simons’s Renaissance Technologies and D. E. Shaw’s D E Shaw.

Since Contango Oil & Gas Company (NYSEAMEX:MCF) has experienced a declination in interest from the smart money, we can see that there lies a certain “tier” of hedge funds who were dropping their entire stakes in Q4. Intriguingly, Charles de Vaulx’s International Value Advisers dumped the largest position of all the hedgies we monitor, totaling an estimated $4.6 million in stock.. Israel Englander’s fund, Millennium Management, also said goodbye to its stock, about $1.8 million worth. These moves are interesting, as aggregate hedge fund interest fell by 4 funds in Q4.

How are insiders trading Contango Oil & Gas Company (NYSEAMEX:MCF)?

Insider buying is best served when the company in question has seen transactions within the past six months. Over the latest half-year time frame, Contango Oil & Gas Company (NYSEAMEX:MCF) has seen 2 unique insiders purchasing, and zero insider sales (see the details of insider trades here).

Let’s check out hedge fund and insider activity in other stocks similar to Contango Oil & Gas Company (NYSEAMEX:MCF). These stocks are Permian Basin Royalty Trust (NYSE:PBT), Swift Energy Company (NYSE:SFY), Midstates Petroleum Company Inc (NYSE:MPO), TransGlobe Energy Corporation (USA) (NASDAQ:TGA), and Forest Oil Corporation (NYSE:FST). All of these stocks are in the independent oil & gas industry and their market caps are closest to MCF’s market cap.