This Metric Says You Are Smart to Buy Kinder Morgan Energy Partners LP (KMP)

Should Kinder Morgan Energy Partners LP (NYSE:KMP) investors track the following data?

In the 21st century investor’s toolkit, there are many metrics shareholders can use to watch the equity markets. Two of the most underrated are hedge fund and insider trading activity. At Insider Monkey, our research analyses have shown that, historically, those who follow the top picks of the best investment managers can outpace the market by a healthy margin (see just how much).

Equally as crucial, positive insider trading sentiment is another way to look at the marketplace. Obviously, there are a number of incentives for a corporate insider to drop shares of his or her company, but just one, very clear reason why they would buy. Several empirical studies have demonstrated the impressive potential of this tactic if you understand where to look (learn more here).

Now that that’s out of the way, let’s discuss the newest info about Kinder Morgan Energy Partners LP (NYSE:KMP).

Hedge fund activity in Kinder Morgan Energy Partners LP (NYSE:KMP)

At the end of the second quarter, a total of 14 of the hedge funds we track were bullish in this stock, a change of 8% from the first quarter. With hedge funds’ sentiment swirling, there exists a select group of noteworthy hedge fund managers who were boosting their holdings considerably.

According to our 13F database, Renaissance Technologies, managed by Jim Simons, holds the biggest position in Kinder Morgan Energy Partners LP (NYSE:KMP). Renaissance Technologies has a $98.4 million position in the stock, comprising 0.3% of its 13F portfolio. Coming in second is PEAK6 Capital Management, managed by Matthew Hulsizer, which held a $26.3 million call position; the fund has 0.1% of its 13F portfolio invested in the stock. Other hedgies that are bullish include Ken Griffin’s Citadel Investment Group, and Steven Tananbaum’s GoldenTree Asset Management.

Now, specific money managers have been driving this bullishness. Renaissance Technologies, managed by Jim Simons, assembled the most outsized position in Kinder Morgan Energy Partners LP (NYSE:KMP). Renaissance Technologies had 98.4 million invested in the company at the end of the quarter. Matthew Hulsizer’s PEAK6 Capital Management also initiated a $26.3 million position during the quarter. The following funds were also among the new KMP investors: Ken Griffin’s Citadel Investment Group, Millennium Management Subsidiary’s Green Arrow Capital Management, and Steven Tananbaum’s GoldenTree Asset Management.

Insider trading activity in Kinder Morgan Energy Partners LP (NYSE:KMP)

Insider buying made by high-level executives is best served when the primary stock in question has seen transactions within the past 180 days. Over the last six-month time period, Kinder Morgan Energy Partners LP (NYSE:KMP) has seen zero unique insiders buying, and zero insider sales (see the details of insider trades here).

We’ll go over the relationship between both of these indicators in other stocks similar to Kinder Morgan Energy Partners LP (NYSE:KMP). These stocks are Plains All American Pipeline, L.P. (NYSE:PAA), Spectra Energy Corp. (NYSE:SE), Williams Companies, Inc. (NYSE:WMB), Kinder Morgan Inc (NYSE:KMI), and Enbridge Inc (USA) (NYSE:ENB). This group of stocks are the members of the oil & gas pipelines industry and their market caps are similar to KMP’s market cap.

Using the returns explained by the previously mentioned tactics, regular investors must always watch hedge fund and insider trading sentiment, and Kinder Morgan Energy Partners LP (NYSE:KMP) applies perfectly to this mantra.

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