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Bill Barrett Corporation (BBG): Are Hedge Funds Right About This Stock?

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Bill Barrett Corporation (NYSE:BBG) has experienced a decrease in activity from the world’s largest hedge funds lately.

According to most stock holders, hedge funds are viewed as worthless, outdated investment vehicles of the past. While there are more than 8000 funds in operation today, we choose to focus on the elite of this group, about 450 funds. Most estimates calculate that this group has its hands on the lion’s share of the hedge fund industry’s total capital, and by paying attention to their top stock picks, we have determined a few investment strategies that have historically outpaced Mr. Market. Our small-cap hedge fund strategy outperformed 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 topped the S&P 500 index by 23.3 percentage points in 8 months (check out a sample of our picks).

Bill Barrett Corporation (NYSE:BBG)

Just as important, bullish insider trading sentiment is a second way to break down the marketplace. As the old adage goes: there are a variety of stimuli for an insider to get rid of shares of his or her company, but just one, very clear reason why they would buy. Various academic studies have demonstrated the useful potential of this strategy if you know what to do (learn more here).

Consequently, we’re going to take a look at the recent action surrounding Bill Barrett Corporation (NYSE:BBG).

Hedge fund activity in Bill Barrett Corporation (NYSE:BBG)

At the end of the first quarter, a total of 10 of the hedge funds we track were bullish in this stock, a change of -33% from the first quarter. With the smart money’s sentiment swirling, there exists a select group of noteworthy hedge fund managers who were increasing their stakes considerably.

When looking at the hedgies we track, Point State Capital, managed by Sean Cullinan, holds the biggest position in Bill Barrett Corporation (NYSE:BBG). Point State Capital has a $32.9 million position in the stock, comprising 0.5% of its 13F portfolio. The second largest stake is held by Steven Cohen of SAC Capital Advisors, with a $29.7 million position; the fund has 0.1% of its 13F portfolio invested in the stock. Other peers that hold long positions include Israel Englander’s Millennium Management, Gregory Fraser, Rudolph Kluiber, and Timothy Krochuk’s GRT Capital Partners and Matthew Hulsizer’s PEAK6 Capital Management.

Seeing as Bill Barrett Corporation (NYSE:BBG) has witnessed falling interest from the aggregate hedge fund industry, logic holds that there lies a certain “tier” of funds that slashed their entire stakes at the end of the first quarter. Interestingly, Ken Griffin’s Citadel Investment Group dumped the largest investment of the 450+ funds we monitor, worth an estimated $20.1 million in stock., and Bruce J. Richards and Louis Hanover of Marathon Asset Management was right behind this move, as the fund cut about $19.3 million worth. These moves are intriguing to say the least, as aggregate hedge fund interest fell by 5 funds at the end of the first quarter.

Insider trading activity in Bill Barrett Corporation (NYSE:BBG)

Insider purchases made by high-level executives is at its handiest when the company we’re looking at has experienced transactions within the past six months. Over the latest half-year time period, Bill Barrett Corporation (NYSE:BBG) has experienced zero unique insiders buying, and zero insider sales (see the details of insider trades here).

Let’s go over hedge fund and insider activity in other stocks similar to Bill Barrett Corporation (NYSE:BBG). These stocks are Crestwood Midstream Partners LP (NYSE:CMLP), Rex Energy Corporation (NASDAQ:REXX), W&T Offshore, Inc. (NYSE:WTI), Northern Oil & Gas, Inc. (NYSEAMEX:NOG), and Approach Resources Inc. (NASDAQ:AREX). This group of stocks are the members of the oil & gas drilling & exploration industry and their market caps match BBG’s market cap.

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