Cimarex Energy Co (NYSE:XEC): Are Hedge Funds Right About This Stock?

Cimarex Energy Co (NYSE:XEC) was in 17 hedge funds’ portfolio at the end of December. XEC has seen a decrease in hedge fund interest in recent months. There were 18 hedge funds in our database with XEC holdings at the end of the previous quarter.

According to most stock holders, hedge funds are viewed as worthless, old investment vehicles of yesteryear. While there are over 8000 funds with their doors open at the moment, we look at the leaders of this group, close to 450 funds. It is widely believed 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 uncovered a few investment strategies that have historically beaten the S&P 500 index. Our small-cap hedge fund strategy outstripped the S&P 500 index by 18 percentage points a year for a decade in our back tests, and since we’ve began to sharing our picks with our subscribers at the end of August 2012, we have outclassed the S&P 500 index by 25 percentage points in 6.5 month (check out a sample of our picks).

Cimarex Energy Co (NYSE:XEC)

Equally as key, positive insider trading activity is a second way to break down the marketplace. There are many motivations for an upper level exec to cut shares of his or her company, but only one, very obvious reason why they would buy. Several empirical studies have demonstrated the market-beating potential of this strategy if investors know where to look (learn more here).

Now, let’s take a glance at the recent action surrounding Cimarex Energy Co (NYSE:XEC).

What does the smart money think about Cimarex Energy Co (NYSE:XEC)?

At the end of the fourth quarter, a total of 17 of the hedge funds we track were long in this stock, a change of -6% from one quarter earlier. With hedge funds’ sentiment swirling, there exists a few key hedge fund managers who were increasing their stakes considerably.

According to our comprehensive database, Citadel Investment Group, managed by Ken Griffin, holds the biggest position in Cimarex Energy Co (NYSE:XEC). Citadel Investment Group has a $53 million position in the stock, comprising 0.1% of its 13F portfolio. Sitting at the No. 2 spot is Chuck Royce of Royce & Associates, with a $51 million position; 2.1% of its 13F portfolio is allocated to the stock. Remaining peers that are bullish include Ric Dillon’s Diamond Hill Capital, Charles de Vaulx’s International Value Advisers and Peter Rathjens, Bruce Clarke and John Campbell’s Arrowstreet Capital.

Since Cimarex Energy Co (NYSE:XEC) has witnessed a declination in interest from the aggregate hedge fund industry, we can see that there was a specific group of hedge funds that decided to sell off their entire stakes in Q4. It’s worth mentioning that Robert Rodriguez and Steven Romick’s First Pacific Advisors LLC cut the largest position of the “upper crust” of funds we watch, worth about $24 million in stock., and Boykin Curry of Eagle Capital Management was right behind this move, as the fund dumped about $7 million worth. These bearish behaviors are important to note, as aggregate hedge fund interest was cut by 1 funds in Q4.

How are insiders trading Cimarex Energy Co (NYSE:XEC)?

Insider trading activity, especially when it’s bullish, is particularly usable when the company we’re looking at has experienced transactions within the past 180 days. Over the latest half-year time frame, Cimarex Energy Co (NYSE:XEC) has experienced zero unique insiders buying, and 9 insider sales (see the details of insider trades here).

With the results demonstrated by the aforementioned time-tested strategies, retail investors must always monitor hedge fund and insider trading activity, and Cimarex Energy Co (NYSE:XEC) is an important part of this process.

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Insider Monkey’s small-cap strategy returned 29.2% between September 2012 and February 2013 versus 8.7% for the S&P 500 index. Try it now by clicking the link above.

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