Pacific Drilling SA (PACD): Are Hedge Funds Right About This Stock?

Pacific Drilling SA (NYSE:PACD) has experienced a decrease in hedge fund interest lately.

In today’s marketplace, there are many methods investors can use to track the equity markets. Some of the most underrated are hedge fund and insider trading sentiment. At Insider Monkey, our research analyses have shown that, historically, those who follow the best picks of the top fund managers can outclass the S&P 500 by a superb amount (see just how much).

Just as important, positive insider trading sentiment is another way to parse down the marketplace. Just as you’d expect, there are lots of motivations for a bullish insider to get rid of shares of his or her company, but just one, very obvious reason why they would behave bullishly. Several academic studies have demonstrated the valuable potential of this strategy if you understand what to do (learn more here).

With all of this in mind, it’s important to take a gander at the key action regarding Pacific Drilling SA (NYSE:PACD).

Hedge fund activity in Pacific Drilling SA (NYSE:PACD)

At Q1’s end, a total of 11 of the hedge funds we track were long in this stock, a change of 0% from the first quarter. With hedge funds’ sentiment swirling, there exists a few key hedge fund managers who were boosting their stakes meaningfully.

Of the funds we track, Eton Park Capital, managed by Eric Mindich, holds the largest position in Pacific Drilling SA (NYSE:PACD). Eton Park Capital has a $37.1 million position in the stock, comprising 0.7% of its 13F portfolio. On Eton Park Capital’s heels is HBK Investments, managed by David Costen Haley, which held a $36.2 million position; 0.6% of its 13F portfolio is allocated to the stock. Other peers that are bullish include Israel Englander’s Millennium Management, James Dinan’s York Capital Management and Phill Gross and Robert Atchinson’s Adage Capital Management.

Seeing as Pacific Drilling SA (NYSE:PACD) has witnessed declining sentiment from the aggregate hedge fund industry, it’s easy to see that there lies a certain “tier” of hedgies that elected to cut their positions entirely in Q1. Interestingly, Charles Davidson’s Wexford Capital cut the biggest investment of the “upper crust” of funds we watch, totaling an estimated $1 million in stock., and Matthew Hulsizer of PEAK6 Capital Management was right behind this move, as the fund sold off about $0.1 million worth. These moves are interesting, as total hedge fund interest stayed the same (this is a bearish signal in our experience).

How have insiders been trading Pacific Drilling SA (NYSE:PACD)?

Insider trading activity, especially when it’s bullish, is most useful when the company we’re looking at has experienced transactions within the past 180 days. Over the latest half-year time frame, Pacific Drilling SA (NYSE:PACD) has seen zero unique insiders purchasing, and zero insider sales (see the details of insider trades here).

Let’s also review hedge fund and insider activity in other stocks similar to Pacific Drilling SA (NYSE:PACD). These stocks are Kodiak Oil & Gas Corp (USA) (NYSE:KOG), BreitBurn Energy Partners L.P. (NASDAQ:BBEP), EV Energy Partners, L.P. (NASDAQ:EVEP), Ocean Rig UDW Inc (NASDAQ:ORIG), and Unit Corporation (NYSE:UNT). This group of stocks are in the oil & gas drilling & exploration industry and their market caps match PACD’s market cap.