Cheniere Energy, Inc. (LNG): Proof You Might Wanna Take Profits

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Should energy investors consider Cheniere Energy, Inc. (NYSEAMEX:LNG)?

In the eyes of many market players, hedge funds are assumed to be useless, old investment vehicles of a period lost to current times. Although there are over 8,000 hedge funds with their doors open in present day, Insider Monkey aim at the moguls of this club, close to 525 funds. Analysts calculate that this group controls most of the hedge fund industry’s total assets, and by paying attention to their best stock picks, we’ve come up with a number of investment strategies that have historically outstripped the market. Our small-cap hedge fund strategy outpaced the S&P 500 index by 18 percentage points annually 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 outclassed the S&P 500 index by 33 percentage points in 11 months (see all of our picks from August).

Just as key, bullish insider trading activity is another way to look at the world of equities. Just as you’d expect, there are many stimuli for a bullish insider to get rid of shares of his or her company, but only one, very simple reason why they would initiate a purchase. Various academic studies have demonstrated the valuable potential of this method if piggybackers know where to look (learn more here).

What’s more, it’s important to study the newest info for Cheniere Energy, Inc. (NYSEAMEX:LNG).

Cheniere Energy, Inc. (NYSEAMEX:LNG)

Hedge fund activity in Cheniere Energy, Inc. (NYSEAMEX:LNG)

At the end of the second quarter, a total of 40 of the hedge funds we track were bullish in this stock, a change of -13% from the first quarter. With the smart money’s sentiment swirling, there exists a few notable hedge fund managers who were boosting their stakes significantly.

When using filings from the hedgies we track, Sean Cullinan’s Point State Capital had the most valuable position in Cheniere Energy, Inc. (NYSEAMEX:LNG), worth close to $381.2 million, accounting for 6.6% of its total 13F portfolio. Coming in second is Alan Fournier of Pennant Capital Management, with a $152.1 million position; 2.8% of its 13F portfolio is allocated to the stock. Some other peers that are bullish include James Crichton and Adam Weiss’s Scout Capital Management, Michael Lowenstein’s Kensico Capital and Israel Englander’s Millennium Management.

Due to the fact Cheniere Energy, Inc. (NYSEAMEX:LNG) has faced dropping sentiment from the smart money’s best and brightest, logic holds that there were a few fund managers that decided to sell off their full holdings last quarter. Interestingly, William B. Gray’s Orbis Investment Management sold off the largest investment of all the hedgies we watch, worth close to $139.6 million in stock, and Dan Loeb of Third Point was right behind this move, as the fund dropped about $112 million worth. These bearish behaviors are interesting, as total hedge fund interest fell by 6 funds last quarter.

How have insiders been trading Cheniere Energy, Inc. (NYSEAMEX:LNG)?

Insider buying made by high-level executives is at its handiest when the company we’re looking at has experienced transactions within the past 180 days. Over the latest 180-day time period, Cheniere Energy, Inc. (NYSEAMEX:LNG) has seen zero unique insiders purchasing, and 8 insider sales (see the details of insider trades here).

We’ll also review the relationship between both of these indicators in other stocks similar to Cheniere Energy, Inc. (NYSEAMEX:LNG). These stocks are Markwest Energy Partners LP (NYSE:MWE), Penn West Petroleum Ltd (USA) (NYSE:PWE), QEP Resources Inc (NYSE:QEP), Whiting Petroleum Corp (NYSE:WLL), and Helmerich & Payne, Inc. (NYSE:HP). This group of stocks belong to the oil & gas drilling & exploration industry and their market caps are similar to LNG’s market cap.

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