Is SM Energy Co. (NYSE:SM) a good investment?
In the 21st century investor’s toolkit, there are dozens of methods market participants can use to monitor the equity markets. Two of the most innovative are hedge fund and insider trading interest. At Insider Monkey, our research analyses have shown that, historically, those who follow the best picks of the top fund managers can outperform the broader indices by a very impressive margin (see just how much).
Just as key, bullish insider trading sentiment is another way to look at the marketplace. Obviously, there are many stimuli for a corporate insider to sell shares of his or her company, but just one, very obvious reason why they would behave bullishly. Several academic studies have demonstrated the impressive potential of this tactic if “monkeys” understand where to look (learn more here).
What’s more, it’s important to analyze the latest info about SM Energy Co. (NYSE:SM).
What have hedge funds been doing with SM Energy Co. (NYSE:SM)?
In preparation for the third quarter, a total of 23 of the hedge funds we track held long positions in this stock, a change of 0% from the first quarter. With hedgies’ sentiment swirling, there exists an “upper tier” of key hedge fund managers who were boosting their stakes considerably.
Out of the hedge funds we follow, Citadel Investment Group, managed by Ken Griffin, holds the biggest position in SM Energy Co. (NYSE:SM). Citadel Investment Group has a $95.6 million position in the stock, comprising 0.2% of its 13F portfolio. Sitting at the No. 2 spot is SAC Capital Advisors, managed by Steven Cohen, which held a $84 million position; 0.5% of its 13F portfolio is allocated to the company. Remaining peers with similar optimism include Dmitry Balyasny’s Balyasny Asset Management, Robert Rodriguez and Steven Romick’s First Pacific Advisors LLC and William Harnisch’s Peconic Partners LLC.
As SM Energy Co. (NYSE:SM) has experienced declining interest from upper-tier hedge fund managers, it’s easy to see that there is a sect of hedge funds who were dropping their entire stakes in Q1. At the top of the heap, Clint Carlson’s Carlson Capital cut the largest investment of the 450+ funds we key on, totaling about $18.1 million in stock, and Peter Rathjens, Bruce Clarke and John Campbell of Arrowstreet Capital was right behind this move, as the fund said goodbye to about $1.2 million worth. These moves are interesting, as total hedge fund interest stayed the same (this is a bearish signal in our experience).
How are insiders trading SM Energy Co. (NYSE:SM)?
Bullish insider trading is most useful when the company we’re looking at has experienced transactions within the past half-year. Over the latest six-month time period, SM Energy Co. (NYSE:SM) has experienced zero unique insiders purchasing, and zero insider sales (see the details of insider trades here).
We’ll check out the relationship between both of these indicators in other stocks similar to SM Energy Co. (NYSE:SM). These stocks are WPX Energy Inc (NYSE:WPX), Kosmos Energy Ltd (NYSE:KOS), Gulfport Energy Corporation (NASDAQ:GPOR), Oasis Petroleum Inc. (NYSE:OAS), and Energen Corporation (NYSE:EGN). This group of stocks are in the independent oil & gas industry and their market caps resemble SM’s market cap.
| Company Name | # of Hedge Funds | # of Insiders Buying | # of Insiders Selling |
| WPX Energy Inc (NYSE:WPX) | 23 | 0 | 0 |
| Kosmos Energy Ltd (NYSE:KOS) | 12 | 0 | 0 |
| Gulfport Energy Corporation (NASDAQ:GPOR) | 27 | 0 | 0 |
| Oasis Petroleum Inc. (NYSE:OAS) | 22 | 0 | 0 |
| Energen Corporation (NYSE:EGN) | 17 | 0 | 0 |
Using the results explained by the previously mentioned studies, average investors must always keep one eye on hedge fund and insider trading sentiment, and SM Energy Co. (NYSE:SM) applies perfectly to this mantra.
