Warren Resources, Inc. (NASDAQ:WRES) has seen a decrease in hedge fund sentiment of late.
To most stock holders, hedge funds are seen as underperforming, outdated financial tools of the past. While there are greater than 8000 funds with their doors open today, we choose to focus on the masters of this club, close to 450 funds. It is widely believed that this group controls most of the smart money’s total asset base, and by monitoring their best equity investments, we have come up with a number of investment strategies that have historically beaten the S&P 500 index. Our small-cap hedge fund strategy outstripped the S&P 500 index by 18 percentage points annually for a decade in our back tests, and since we’ve started sharing our picks with our subscribers at the end of August 2012, we have beaten the S&P 500 index by 24 percentage points in 7 months (see all of our picks from August).
Just as beneficial, optimistic insider trading activity is a second way to parse down the marketplace. As the old adage goes: there are a number of stimuli for an executive to cut shares of his or her company, but just one, very clear reason why they would initiate a purchase. Plenty of academic studies have demonstrated the impressive potential of this method if shareholders know what to do (learn more here).
Now, it’s important to take a look at the key action regarding Warren Resources, Inc. (NASDAQ:WRES).
How have hedgies been trading Warren Resources, Inc. (NASDAQ:WRES)?
At year’s end, a total of 8 of the hedge funds we track were bullish in this stock, a change of 0% from the third quarter. With hedgies’ positions undergoing their usual ebb and flow, there exists an “upper tier” of key hedge fund managers who were boosting their holdings considerably.
According to our comprehensive database, Royce & Associates, managed by Chuck Royce, holds the biggest position in Warren Resources, Inc. (NASDAQ:WRES). Royce & Associates has a $0.9 million position in the stock, comprising less than 0.1%% of its 13F portfolio. Sitting at the No. 2 spot is Jim Simons of Renaissance Technologies, with a $0.6 million position; the fund has less than 0.1%% of its 13F portfolio invested in the stock. Remaining hedge funds with similar optimism include Israel Englander’s Millennium Management, David Cohen and Harold Levy’s Iridian Asset Management and Glenn Russell Dubin’s Highbridge Capital Management.
Because Warren Resources, Inc. (NASDAQ:WRES) has witnessed a declination in interest from the entirety of the hedge funds we track, logic holds that there is a sect of funds who sold off their positions entirely at the end of the year. It’s worth mentioning that Gregory Fraser, Rudolph Kluiber, and Timothy Kroch’s GRT Capital Partners sold off the biggest position of all the hedgies we monitor, worth about $0.2 million in stock., and Ken Griffin of Citadel Investment Group was right behind this move, as the fund dumped about $0 million worth. These bearish behaviors are interesting, as total hedge fund interest stayed the same (this is a bearish signal in our experience).
What have insiders been doing with Warren Resources, Inc. (NASDAQ:WRES)?
Bullish insider trading is most useful when the company in question has seen transactions within the past six months. Over the last half-year time frame, Warren Resources, Inc. (NASDAQ:WRES) has seen 2 unique insiders buying, and zero insider sales (see the details of insider trades here).
Let’s also examine hedge fund and insider activity in other stocks similar to Warren Resources, Inc. (NASDAQ:WRES). These stocks are VOC Energy Trust (NYSE:VOC), Abraxas Petroleum Corp. (NASDAQ:AXAS), Penn Virginia Corporation (NYSE:PVA), Ivanhoe Energy Inc. (USA) (NASDAQ:IVAN), and Panhandle Oil and Gas Inc. (NYSE:PHX). All of these stocks are in the independent oil & gas industry and their market caps resemble WRES’s market cap.
