WPX Energy Inc (WPX): Hedge Funds Are Bearish and Insiders Are Bullish, What Should You Do?

WPX Energy Inc (NYSE:WPX) has experienced a decrease in activity from the world’s largest hedge funds in recent months.

In the eyes of most stock holders, hedge funds are seen as worthless, old financial tools of years past. While there are greater than 8000 funds with their doors open at the moment, we choose to focus on the top tier of this group, about 450 funds. Most estimates calculate that this group oversees the lion’s share of all hedge funds’ total capital, and by paying attention to their highest performing investments, we have figured out a number of investment strategies that have historically outstripped Mr. Market. Our small-cap hedge fund strategy outstripped the S&P 500 index by 18 percentage points per annum 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 23.3 percentage points in 8 months (check out a sample of our picks).

Just as beneficial, optimistic insider trading activity is another way to parse down the financial markets. There are many motivations for an upper level exec to cut shares of his or her company, but only one, very clear reason why they would initiate a purchase. Plenty of empirical studies have demonstrated the market-beating potential of this method if you understand where to look (learn more here).

Now, let’s take a peek at the recent action regarding WPX Energy Inc (NYSE:WPX).

How are hedge funds trading WPX Energy Inc (NYSE:WPX)?

At the end of the first quarter, a total of 23 of the hedge funds we track were bullish in this stock, a change of -8% from one quarter earlier.

Judging by the fact that WPX Energy Inc (NYSE:WPX) has witnessed bearish sentiment from the smart money, logic holds that there is a sect of hedgies who sold off their entire stakes in Q1. At the top of the heap, Murray Stahl’s Horizon Asset Management sold off the largest stake of the 450+ funds we key on, comprising close to $29.2 million in stock.. Bruce J. Richards and Louis Hanover’s fund, Marathon Asset Management, also dumped its stock, about $25.6 million worth. These transactions are intriguing to say the least, as aggregate hedge fund interest dropped by 2 funds in Q1.

How have insiders been trading WPX Energy Inc (NYSE:WPX)?

Insider purchases made by high-level executives is best served when the company in focus has seen transactions within the past half-year. Over the latest six-month time frame, WPX Energy Inc (NYSE:WPX) has experienced 1 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 WPX Energy Inc (NYSE:WPX). These stocks are Energen Corporation (NYSE:EGN), Oasis Petroleum Inc. (NYSE:OAS), Gulfport Energy Corporation (NASDAQ:GPOR), Newfield Exploration Co. (NYSE:NFX), and Ultra Petroleum Corp. (NYSE:UPL). This group of stocks are in the independent oil & gas industry and their market caps are similar to WPX’s market cap.