Is EXCO Resources Inc (NYSE:XCO) a buy at these levels?
In today’s marketplace, there are plenty of gauges market participants can use to analyze their holdings. A couple 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 top picks of the elite money managers can outclass the broader indices by a healthy margin (see just how much).
Just as necessary, positive insider trading sentiment is another way to analyze the world of equities. There are a variety of stimuli for an upper level exec to drop shares of his or her company, but only one, very clear reason why they would buy. Many academic studies have demonstrated the useful potential of this tactic if piggybackers know what to do (learn more here).
Keeping this in mind, let’s examine the recent info about EXCO Resources Inc (NYSE:XCO).
How are hedge funds trading EXCO Resources Inc (NYSE:XCO)?
Heading into Q3, a total of 14 of the hedge funds we track held long positions in this stock, a change of -18% from the first quarter. With hedge funds’ positions undergoing their usual ebb and flow, there exists a select group of notable hedge fund managers who were upping their holdings considerably.
When using filings from the hedgies we track, Oaktree Capital Management, managed by Howard Marks, holds the most valuable position in EXCO Resources Inc (NYSE:XCO). Oaktree Capital Management has a $281 million position in the stock, comprising 5.7% of its 13F portfolio. On Oaktree Capital Management’s heels is Invesco Private Capital (WL Ross), managed by Wilbur Ross, which held a $240.7 million position; 24.9% of its 13F portfolio is allocated to the stock. Other peers that hold long positions include Prem Watsa’s Fairfax Financial Holdings, Ken Griffin’s Citadel Investment Group and Phil Falcone’s Harbinger.
Because EXCO Resources Inc (NYSE:XCO) has faced bearish sentiment from upper-tier hedge fund managers, it’s easy to see that there lies a certain “tier” of hedgies that slashed their positions entirely at the end of the second quarter. It’s worth mentioning that Jim Simons’s Renaissance Technologies cut the largest position of the “upper crust” of funds we track, worth close to $5.2 million in stock. Sean Cullinan’s fund, Point State Capital, also sold off its stock, about $5 million worth. These moves are intriguing to say the least, as aggregate hedge fund interest fell by 3 funds at the end of the second quarter.
Insider trading activity in EXCO Resources Inc (NYSE:XCO)
Legal insider trading, particularly when it’s bullish, is most useful when the primary stock in question has experienced transactions within the past half-year. Over the latest 180-day time frame, EXCO Resources Inc (NYSE:XCO) has experienced zero unique insiders buying, and zero insider sales (see the details of insider trades here).
We’ll also take a look at the relationship between both of these indicators in other stocks similar to EXCO Resources Inc (NYSE:XCO). These stocks are Crosstex Energy, L.P. (NASDAQ:XTEX), PDC Energy Inc (NASDAQ:PDCE), Enbridge Energy Management, L.L.C. (NYSE:EEQ), Gran Tierra Energy Inc. (NYSEAMEX:GTE), and Bonanza Creek Energy Inc (NYSE:BCEI). This group of stocks are in the independent oil & gas industry and their market caps match XCO’s market cap.
| Company Name | # of Hedge Funds | # of Insiders Buying | # of Insiders Selling |
| Crosstex Energy, L.P. (NASDAQ:XTEX) | 7 | 0 | 0 |
| PDC Energy Inc (NASDAQ:PDCE) | 19 | 0 | 0 |
| Enbridge Energy Management, L.L.C. (NYSE:EEQ) | 6 | 0 | 0 |
| Gran Tierra Energy Inc. (NYSEAMEX:GTE) | 21 | 0 | 0 |
| Bonanza Creek Energy Inc (NYSE:BCEI) | 15 | 0 | 0 |
Using the results demonstrated by the previously mentioned studies, average investors must always pay attention to hedge fund and insider trading sentiment, and EXCO Resources Inc (NYSE:XCO) shareholders fit into this picture quite nicely.
