Is Superior Energy Services, Inc. (SPN) Going to Burn These Hedge Funds?

Is Superior Energy Services, Inc. (NYSE:SPN) ready to rally soon? Hedge funds are becoming more confident. The number of long hedge fund positions inched up by 5 recently.

In the eyes of most stock holders, hedge funds are seen as underperforming, outdated financial vehicles of yesteryear. While there are greater than 8000 funds trading at present, we at Insider Monkey hone in on the moguls of this group, around 450 funds. Most estimates calculate that this group oversees most of the hedge fund industry’s total asset base, and by paying attention to their top picks, we have determined a number of investment strategies that have historically beaten the broader indices. Our small-cap hedge fund strategy beat the S&P 500 index by 18 percentage points a 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 beaten the S&P 500 index by 23.3 percentage points in 8 months (check out a sample of our picks).

Just as important, positive insider trading activity is a second way to break down the world of equities. There are lots of stimuli for a corporate insider to get rid of shares of his or her company, but only one, very obvious reason why they would initiate a purchase. Plenty of academic studies have demonstrated the valuable potential of this strategy if piggybackers understand where to look (learn more here).

Keeping this in mind, it’s important to take a peek at the recent action encompassing Superior Energy Services, Inc. (NYSE:SPN).

What have hedge funds been doing with Superior Energy Services, Inc. (NYSE:SPN)?

In preparation for this quarter, a total of 22 of the hedge funds we track were bullish in this stock, a change of 29% from the first quarter. With hedgies’ capital changing hands, there exists an “upper tier” of noteworthy hedge fund managers who were boosting their holdings substantially.

Of the funds we track, SAC Capital Advisors, managed by Steven Cohen, holds the most valuable position in Superior Energy Services, Inc. (NYSE:SPN). SAC Capital Advisors has a $93.6 million position in the stock, comprising 0.5% of its 13F portfolio. Sitting at the No. 2 spot is Ken Griffin of Citadel Investment Group, with a $49.2 million position; 0.1% of its 13F portfolio is allocated to the stock. Some other hedge funds with similar optimism include Israel Englander’s Millennium Management, David Dreman’s Dreman Value Management and Thomas E. Claugus’s GMT Capital.

Now, some big names were breaking ground themselves. Clough Capital Partners, managed by Charles Clough, created the most valuable position in Superior Energy Services, Inc. (NYSE:SPN). Clough Capital Partners had 17.5 million invested in the company at the end of the quarter. Clint Carlson’s Carlson Capital also initiated a $17.2 million position during the quarter. The following funds were also among the new SPN investors: Steven Tananbaum’s GoldenTree Asset Management, Don Morgan’s Brigade Capital, and Paul Tudor Jones’s Tudor Investment Corp.

Insider trading activity in Superior Energy Services, Inc. (NYSE:SPN)

Insider purchases made by high-level executives is most useful when the company we’re looking at has experienced transactions within the past six months. Over the last 180-day time frame, Superior Energy Services, Inc. (NYSE:SPN) has experienced 1 unique insiders buying, and 2 insider sales (see the details of insider trades here).

Let’s also take a look at hedge fund and insider activity in other stocks similar to Superior Energy Services, Inc. (NYSE:SPN). These stocks are Core Laboratories N.V. (NYSE:CLB), RPC, Inc. (NYSE:RES), Dril-Quip, Inc. (NYSE:DRQ), MDU Resources Group Inc (NYSE:MDU), and Oil States International, Inc. (NYSE:OIS). This group of stocks belong to the oil & gas equipment & services industry and their market caps match SPN’s market cap.