Citadel Investment Group, a large hedge fund managed by billionaire Ken Griffin, has acquired 11.2 million shares of oil and gas company Halcon Resources Corp (NYSE:HK). According to a 13G filed with the SEC, Citadel now owns 5.2% of the shares outstanding. Citadel’s 13F filing for the third quarter of 2012 showed that the fund had owned 8.9 million shares at the end of September, nearly triple what it had owned three months earlier, and clearly the fund has continued buying shares over the last two months. Find more of Griffin's stock picks from the end of September.
We covered a large insider purchase at Halcon in mid September (read more about the $700,000 insider buy). In addition, our database of insider trading filings shows buying by eight different insiders in November. Since insider purchases tend to be bullish signs, and stocks bought by a consensus of insiders are particularly likely to outperform the market (learn more about studies on insider trading), this is useful to note. The stock is up 9% since the most recent insider buy, however, and it’s possible that the outperformance has run its course.
In the third quarter of 2012, Halcon had $73 million in revenue compared to $24 million in the same period in 2011. About 90% of revenue came from sales of oil, with nearly all of the rest coming from sales of natural gas and natural gas liquids. Oil production more than tripled from a year earlier, while natural gas and NGLs were roughly double the previous levels. Production costs were up as well, and Halcon also recorded higher SGA expenses. As a result, the company experienced an operating loss of about $5 million during the quarter, while at its lower production levels of a year ago it had earned a small amount of operating profits.