Ultra Petroleum Corp. (UPL): Are Hedge Funds Right About This Stock?

Ultra Petroleum Corp. (NYSE:UPL) has seen a decrease in hedge fund sentiment of late.

If you’d ask most investors, hedge funds are viewed as slow, outdated financial tools of years past. While there are greater than 8000 funds trading at the moment, we hone in on the moguls of this group, about 450 funds. Most estimates calculate that this group controls the majority of the hedge fund industry’s total capital, and by tracking their highest performing equity investments, we have figured out a number of investment strategies that have historically beaten the market. Our small-cap hedge fund strategy outpaced the S&P 500 index by 18 percentage points a 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 beaten the S&P 500 index by 23.3 percentage points in 8 months (check out a sample of our picks).

Just as key, bullish insider trading sentiment is a second way to parse down the world of equities. As the old adage goes: there are a number of motivations for a corporate insider to sell shares of his or her company, but only one, very obvious reason why they would buy. Many academic studies have demonstrated the impressive potential of this tactic if investors know where to look (learn more here).

Now, let’s take a peek at the latest action surrounding Ultra Petroleum Corp. (NYSE:UPL).

Hedge fund activity in Ultra Petroleum Corp. (NYSE:UPL)

At Q1’s end, a total of 20 of the hedge funds we track were bullish in this stock, a change of -5% from one quarter earlier. With the smart money’s capital changing hands, there exists a select group of noteworthy hedge fund managers who were upping their holdings substantially.

Of the funds we track, Michael Kaufman’s MAK Capital One had the largest position in Ultra Petroleum Corp. (NYSE:UPL), worth close to $33.2 million, comprising 5.3% of its total 13F portfolio. The second largest stake is held by Elliott Management, managed by Paul Singer, which held a $26 million call position; the fund has 0.5% of its 13F portfolio invested in the stock. Remaining hedge funds that are bullish include Gregg J. Powers’s Private Capital Management, Ken Griffin’s Citadel Investment Group and George Soros’s Soros Fund Management.

Due to the fact that Ultra Petroleum Corp. (NYSE:UPL) has experienced a declination in interest from the smart money, logic holds that there lies a certain “tier” of money managers who sold off their entire stakes in Q1. It’s worth mentioning that Bruce J. Richards and Louis Hanover’s Marathon Asset Management sold off the largest investment of all the hedgies we track, totaling close to $45.9 million in stock., and Ron Gutfleish of Elm Ridge Capital was right behind this move, as the fund sold off about $21.2 million worth. These transactions are important to note, as aggregate hedge fund interest fell by 1 funds in Q1.

What have insiders been doing with Ultra Petroleum Corp. (NYSE:UPL)?

Insider trading activity, especially when it’s bullish, is best served when the company in question has experienced transactions within the past half-year. Over the latest six-month time frame, Ultra Petroleum Corp. (NYSE:UPL) has seen 2 unique insiders buying, and zero insider sales (see the details of insider trades here).

Let’s check out hedge fund and insider activity in other stocks similar to Ultra Petroleum Corp. (NYSE:UPL). These stocks are Oasis Petroleum Inc. (NYSE:OAS), Mcmoran Exploration Co (NYSE:MMR), Gulfport Energy Corporation (NASDAQ:GPOR), WPX Energy Inc (NYSE:WPX), and Newfield Exploration Co. (NYSE:NFX). All of these stocks are in the independent oil & gas industry and their market caps are closest to UPL’s market cap.