Berry Petroleum Company (NYSE:BRY) investors should pay attention to an increase in activity from the world's largest hedge funds recently.
To most market participants, hedge funds are seen as worthless, old financial tools of years past. While there are more than 8000 funds in operation at the moment, we at Insider Monkey look at the crème de la crème of this club, close to 450 funds. It is estimated that this group controls the majority of all hedge funds' total asset base, and by paying attention to their highest performing stock picks, we have uncovered a few investment strategies that have historically outpaced the broader indices. Our small-cap hedge fund strategy outpaced the S&P 500 index by 18 percentage points per year 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 outperformed the S&P 500 index by 23.3 percentage points in 8 months (check out a sample of our picks).
Equally as important, bullish insider trading activity is a second way to parse down the investments you're interested in. As the old adage goes: there are plenty of motivations for an insider to drop shares of his or her company, but just one, very simple reason why they would initiate a purchase. Many empirical studies have demonstrated the valuable potential of this strategy if piggybackers understand where to look (learn more here).
With these "truths" under our belt, we're going to take a gander at the key action surrounding Berry Petroleum Company (NYSE:BRY).
In preparation for this quarter, a total of 17 of the hedge funds we track held long positions in this stock, a change of 113% from the previous quarter. With hedgies' capital changing hands, there exists a select group of notable hedge fund managers who were increasing their stakes meaningfully.
When looking at the hedgies we track, Andrew Spokes's Farallon Capital had the most valuable position in Berry Petroleum Company (NYSE:BRY), worth close to $41 million, comprising 0.8% of its total 13F portfolio. The second largest stake is held by Robert Emil Zoellner of Alpine Associates, with a $38 million position; the fund has 1.5% of its 13F portfolio invested in the stock. Remaining hedge funds with similar optimism include Jane Mendillo's Harvard Management Co, David Dreman's Dreman Value Management and John Overdeck and David Siegel's Two Sigma Advisors.
As one would reasonably expect, key hedge funds have jumped into Berry Petroleum Company (NYSE:BRY) headfirst. Farallon Capital, managed by Andrew Spokes, created the largest position in Berry Petroleum Company (NYSE:BRY). Farallon Capital had 41 million invested in the company at the end of the quarter. Robert Emil Zoellner's Alpine Associates also initiated a $38 million position during the quarter. The other funds with brand new BRY positions are Jane Mendillo's Harvard Management Co, John Overdeck and David Siegel's Two Sigma Advisors, and Michael Doheny's Freshford Capital Management.
Insider trading activity, especially when it's bullish, is particularly usable when the company in question has seen transactions within the past 180 days. Over the latest six-month time period, Berry Petroleum Company (NYSE:BRY) has seen zero unique insiders buying, and 11 insider sales (see the details of insider trades here).
Let's also examine hedge fund and insider activity in other stocks similar to Berry Petroleum Company (NYSE:BRY). These stocks are Ultra Petroleum Corp. (NYSE:UPL), Newfield Exploration Co. (NYSE:NFX), Mcmoran Exploration Co (NYSE:MMR), Rosetta Resources Inc. (NASDAQ:ROSE), and Laredo Petroleum Holdings Inc (NYSE:LPI). All of these stocks are in the independent oil & gas industry and their market caps are similar to BRY's market cap.