Should You Avoid Forum Energy Technologies Inc (FET)?

Forum Energy Technologies Inc (NYSE:FET) has seen a decrease in enthusiasm from smart money in recent months.

According to most stock holders, hedge funds are viewed as slow, old financial tools of yesteryear. While there are over 8000 funds with their doors open at the moment, we at Insider Monkey hone in on the bigwigs of this club, around 450 funds. It is widely believed that this group controls the majority of the hedge fund industry’s total capital, and by keeping an eye on their best picks, we have found a few investment strategies that have historically outstripped the market. Our small-cap hedge fund strategy outpaced the S&P 500 index by 18 percentage points per year 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 topped the S&P 500 index by 24 percentage points in 7 months (check out a sample of our picks).

Equally as integral, optimistic insider trading activity is a second way to break down the world of equities. As the old adage goes: there are lots of stimuli for an insider to downsize shares of his or her company, but only one, very obvious reason why they would initiate a purchase. Many academic studies have demonstrated the impressive potential of this method if shareholders understand where to look (learn more here).

Consequently, it’s important to take a peek at the key action surrounding Forum Energy Technologies Inc (NYSE:FET).

How are hedge funds trading Forum Energy Technologies Inc (NYSE:FET)?

Heading into 2013, a total of 6 of the hedge funds we track were long in this stock, a change of -40% from the previous quarter. With the smart money’s capital changing hands, there exists a few noteworthy hedge fund managers who were increasing their stakes substantially.

When looking at the hedgies we track, Pennant Capital Management, managed by Alan Fournier, holds the most valuable position in Forum Energy Technologies Inc (NYSE:FET). Pennant Capital Management has a $26.9 million position in the stock, comprising 0.6% of its 13F portfolio. On Pennant Capital Management’s heels is Steadfast Capital Management, managed by Robert Pitts, which held a $6 million position; 0.2% of its 13F portfolio is allocated to the company. Some other peers that hold long positions include Richard Driehaus’s Driehaus Capital, D. E. Shaw’s D E Shaw and Ken Griffin’s Citadel Investment Group.

Because Forum Energy Technologies Inc (NYSE:FET) has experienced falling interest from the entirety of the hedge funds we track, it’s safe to say that there lies a certain “tier” of funds that slashed their positions entirely in Q4. Intriguingly, Peter Adam Hochfelder’s Brahman Capital dropped the biggest investment of all the hedgies we watch, valued at close to $33.3 million in stock.. SAC Subsidiary’s fund, Sigma Capital Management, also dumped its stock, about $2.9 million worth. These moves are intriguing to say the least, as total hedge fund interest fell by 4 funds in Q4.

What have insiders been doing with Forum Energy Technologies Inc (NYSE:FET)?

Insider trading activity, especially when it’s bullish, is particularly usable when the company in focus has seen transactions within the past half-year. Over the last 180-day time frame, Forum Energy Technologies Inc (NYSE:FET) has experienced zero unique insiders purchasing, and 9 insider sales (see the details of insider trades here).

Let’s also review hedge fund and insider activity in other stocks similar to Forum Energy Technologies Inc (NYSE:FET). These stocks are CARBO Ceramics Inc. (NYSE:CRR), Energy XXI (Bermuda) Limited (NASDAQ:EXXI), Lufkin Industries, Inc. (NASDAQ:LUFK), Helix Energy Solutions Group Inc. (NYSE:HLX), and Precision Drilling Corp (USA) (NYSE:PDS). All of these stocks are in the oil & gas equipment & services industry and their market caps match FET’s market cap.

With the returns shown by our strategies, retail investors must always keep an eye on hedge fund and insider trading sentiment, and Forum Energy Technologies Inc (NYSE:FET) applies perfectly to this mantra.

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