Kinder Morgan Inc (NYSE:KMI): Are Hedge Funds Right About This Stock?

Kinder Morgan Inc (NYSE:KMI) was in 52 hedge funds’ portfolio at the end of the fourth quarter of 2012. KMI has experienced a decrease in support from the world’s most elite money managers of late. There were 62 hedge funds in our database with KMI holdings at the end of the previous quarter.

In the financial world, there are a multitude of metrics investors can use to track the equity markets. A pair of the most useful are hedge fund and insider trading sentiment. At Insider Monkey, our studies have shown that, historically, those who follow the best picks of the top investment managers can outpace the broader indices by a superb amount (see just how much).

Just as key, positive insider trading sentiment is a second way to parse down the marketplace. Just as you’d expect, there are many reasons for an upper level exec to get rid of shares of his or her company, but just one, very obvious reason why they would initiate a purchase. Several academic studies have demonstrated the valuable potential of this strategy if piggybackers understand what to do (learn more here).

Now, we’re going to take a peek at the key action regarding Kinder Morgan Inc (NYSE:KMI).

How are hedge funds trading Kinder Morgan Inc (NYSE:KMI)?

Heading into 2013, a total of 52 of the hedge funds we track were long in this stock, a change of -16% from the third quarter. With hedge funds’ positions undergoing their usual ebb and flow, there exists an “upper tier” of noteworthy hedge fund managers who were increasing their stakes meaningfully.

According to our comprehensive database, Stephen Mandel’s Lone Pine Capital had the largest position in Kinder Morgan Inc (NYSE:KMI), worth close to $531 million, comprising 3.3% of its total 13F portfolio. The second largest stake is held by Stephen Mandel of Lone Pine Capital, with a $224 million position; the fund has 1.4% of its 13F portfolio invested in the stock (Mandel’s 13F reported two seperate stakes in the company, which can be seen here). Some other hedgies with similar optimism include Bain Capital’s Brookside Capital, Leon Cooperman’s Omega Advisors and Michael Lowenstein’s Kensico Capital.

Since Kinder Morgan Inc (NYSE:KMI) has experienced a declination in interest from the entirety of the hedge funds we track, it’s easy to see that there is a sect of hedgies that slashed their full holdings heading into 2013. At the top of the heap, Peter Rathjens, Bruce Clarke and John Campbell’s Arrowstreet Capital said goodbye to the biggest position of the “upper crust” of funds we watch, totaling about $51 million in stock.. Doug Silverman’s fund, Senator Investment Group, also cut its stock, about $21 million worth. These moves are intriguing to say the least, as aggregate hedge fund interest dropped by 10 funds heading into 2013.

Insider trading activity in Kinder Morgan Inc (NYSE:KMI)

Bullish insider trading is at its handiest when the company in question has experienced transactions within the past six months. Over the last half-year time period, Kinder Morgan Inc (NYSE:KMI) has experienced 2 unique insiders buying, and 6 insider sales (see the details of insider trades here).

With the results exhibited by the aforementioned research, everyday investors must always watch hedge fund and insider trading activity, and Kinder Morgan Inc (NYSE:KMI) applies perfectly to this mantra.

Click here to learn more about Insider Monkey’s Hedge Fund Newsletter

Insider Monkey’s small-cap strategy returned 29.2% between September 2012 and February 2013 versus 8.7% for the S&P 500 index. Try it now by clicking the link above.