Is Hugoton Royalty Trust (HGT) Going to Burn These Hedge Funds?

Hugoton Royalty Trust (NYSE:HGT) was in 7 hedge funds’ portfolio at the end of the fourth quarter of 2012. HGT investors should be aware of a decrease in hedge fund interest recently. There were 8 hedge funds in our database with HGT holdings at the end of the previous quarter.

In the financial world, there are dozens of gauges shareholders can use to monitor stocks. Two of the best are hedge fund and insider trading movement. At Insider Monkey, our research analyses have shown that, historically, those who follow the top picks of the best investment managers can beat the broader indices by a very impressive amount (see just how much).

Equally as key, positive insider trading sentiment is another way to break down the stock market universe. As the old adage goes: there are many motivations for an executive to drop 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 piggybackers know what to do (learn more here).

Keeping this in mind, we’re going to take a look at the key action encompassing Hugoton Royalty Trust (NYSE:HGT).

Hedge fund activity in Hugoton Royalty Trust (NYSE:HGT)

In preparation for this year, a total of 7 of the hedge funds we track were long in this stock, a change of -13% from one quarter earlier. With hedge funds’ sentiment swirling, there exists an “upper tier” of noteworthy hedge fund managers who were increasing their holdings considerably.

Of the funds we track, Royce & Associates, managed by Chuck Royce, holds the biggest position in Hugoton Royalty Trust (NYSE:HGT). Royce & Associates has a $4.1 million position in the stock, comprising less than 0.1%% of its 13F portfolio. Coming in second is Gotham Asset Management, managed by Joel Greenblatt, which held a $2 million position; 0.1% of its 13F portfolio is allocated to the company. Some other hedge funds that hold long positions include Jim Simons’s Renaissance Technologies, Michael Price’s MFP Investors and John Overdeck and David Siegel’s Two Sigma Advisors.

Since Hugoton Royalty Trust (NYSE:HGT) has witnessed declining sentiment from the entirety of the hedge funds we track, we can see that there was a specific group of fund managers who were dropping their full holdings in Q4. At the top of the heap, Peter J. Eichler Jr.’s Aletheia Research and Management cut the biggest stake of the 450+ funds we key on, totaling about $0.1 million in stock. These bearish behaviors are interesting, as total hedge fund interest dropped by 1 funds in Q4.

How are insiders trading Hugoton Royalty Trust (NYSE:HGT)?

Insider buying is particularly usable when the company in focus has seen transactions within the past six months. Over the last half-year time frame, Hugoton Royalty Trust (NYSE:HGT) has seen zero unique insiders purchasing, and zero insider sales (see the details of insider trades here).

Let’s go over hedge fund and insider activity in other stocks similar to Hugoton Royalty Trust (NYSE:HGT). These stocks are BPZ Resources Inc (NYSE:BPZ), Pioneer Energy Services Corp (NYSE:PES), Parker Drilling Company (NYSE:PKD), MV Oil Trust (NYSE:MVO), and TransAtlantic Petroleum Ltd (NYSEAMEX:TAT). This group of stocks are the members of the oil & gas drilling & exploration industry and their market caps resemble HGT’s market cap.

With the results demonstrated by our strategies, retail investors must always pay attention to hedge fund and insider trading sentiment, and Hugoton Royalty Trust (NYSE:HGT) applies perfectly to this mantra.

Click here to learn why you should track hedge funds