Diamond Offshore Drilling Inc (NYSE:DO) has experienced a decrease in activity from the world’s largest hedge funds of late.
In today’s marketplace, there are many gauges investors can use to analyze Mr. Market. Two of the most useful 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 top hedge fund managers can outperform the market by a very impressive amount (see just how much).
Equally as important, positive insider trading sentiment is a second way to break down the stock market universe. There are lots of motivations for an upper level exec to get rid of shares of his or her company, but only one, very clear reason why they would buy. Various academic studies have demonstrated the useful potential of this tactic if shareholders understand where to look (learn more here).
Now, it’s important to take a peek at the recent action encompassing Diamond Offshore Drilling Inc (NYSE:DO).
How are hedge funds trading Diamond Offshore Drilling Inc (NYSE:DO)?
Heading into 2013, a total of 13 of the hedge funds we track were long in this stock, a change of -19% 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 boosting their holdings considerably.
When looking at the hedgies we track, Renaissance Technologies, managed by Jim Simons, holds the biggest position in Diamond Offshore Drilling Inc (NYSE:DO). Renaissance Technologies has a $103.8 million position in the stock, comprising 0.3% of its 13F portfolio. On Renaissance Technologies’s heels is D. E. Shaw of D E Shaw, with a $22.2 million call position; 0.1% of its 13F portfolio is allocated to the company. Other hedgies with similar optimism include Cliff Asness’s AQR Capital Management, David Harding’s Winton Capital Management and Ken Griffin’s Citadel Investment Group.
Since Diamond Offshore Drilling Inc (NYSE:DO) has faced declining sentiment from the smart money, it’s easy to see that there exists a select few money managers that elected to cut their full holdings at the end of the year. At the top of the heap, Peter Rathjens, Bruce Clarke and John Campbell’s Arrowstreet Capital dumped the biggest stake of the “upper crust” of funds we track, valued at about $5.3 million in stock.. Israel Englander’s fund, Millennium Management, also dumped its stock, about $3.7 million worth. These bearish behaviors are intriguing to say the least, as total hedge fund interest fell by 3 funds at the end of the year.
What have insiders been doing with Diamond Offshore Drilling Inc (NYSE:DO)?
Insider buying is particularly usable when the company in focus has experienced transactions within the past half-year. Over the last six-month time frame, Diamond Offshore Drilling Inc (NYSE:DO) has experienced zero unique insiders buying, and 1 insider sales (see the details of insider trades here).
Let’s go over hedge fund and insider activity in other stocks similar to Diamond Offshore Drilling Inc (NYSE:DO). These stocks are ENSCO PLC (NYSE:ESV), Cheniere Energy, Inc. (NYSEAMEX:LNG), Markwest Energy Partners LP (NYSE:MWE), Concho Resources Inc. (NYSE:CXO), and Noble Corporation (NYSE:NE). All of these stocks are in the oil & gas drilling & exploration industry and their market caps match DO’s market cap.
| Company Name | # of Hedge Funds | # of Insiders Buying | # of Insiders Selling |
| ENSCO PLC (NYSE:ESV) | 26 | 1 | 6 |
| Cheniere Energy, Inc. (NYSEAMEX:LNG) | 31 | 0 | 12 |
| Markwest Energy Partners LP (NYSE:MWE) | 5 | 2 | 4 |
| Concho Resources Inc. (NYSE:CXO) | 25 | 0 | 4 |
| Noble Corporation (NYSE:NE) | 31 | 0 | 0 |
With the results demonstrated by Insider Monkey’s time-tested strategies, everyday investors must always keep an eye on hedge fund and insider trading activity, and Diamond Offshore Drilling Inc (NYSE:DO) is no exception.
