Is Cheniere Energy, Inc. (NYSEAMEX:LNG) a buy right now? Hedge funds are betting on the stock. The number of bullish hedge fund positions moved up by 12 in recent months.
To most investors, hedge funds are perceived as slow, old financial vehicles of yesteryear. While there are more than 8000 funds trading today, we at Insider Monkey choose to focus on the bigwigs of this club, close to 450 funds. It is widely believed that this group has its hands on most of the smart money’s total asset base, and by keeping an eye on their highest performing investments, we have unearthed a few investment strategies that have historically outpaced the broader indices. Our small-cap hedge fund strategy beat the S&P 500 index by 18 percentage points a 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 outclassed the S&P 500 index by 23.3 percentage points in 8 months (see the details here).
Equally as important, bullish insider trading activity is a second way to break down the world of equities. There are many reasons for a corporate insider to cut shares of his or her company, but only one, very obvious reason why they would buy. Many academic studies have demonstrated the market-beating potential of this strategy if you know where to look (learn more here).
With these “truths” under our belt, it’s important to take a gander at the latest action encompassing Cheniere Energy, Inc. (NYSEAMEX:LNG).
Hedge fund activity in Cheniere Energy, Inc. (NYSEAMEX:LNG)
Heading into Q2, a total of 46 of the hedge funds we track held long positions in this stock, a change of 35% from the previous quarter. With hedgies’ capital changing hands, there exists a few key hedge fund managers who were increasing their stakes considerably.
Of the funds we track, Point State Capital, managed by Sean Cullinan, holds the most valuable position in Cheniere Energy, Inc. (NYSEAMEX:LNG). Point State Capital has a $384.3 million position in the stock, comprising 5.6% of its 13F portfolio. Sitting at the No. 2 spot is William B. Gray of Orbis Investment Management, with a $139.6 million position; 1.2% of its 13F portfolio is allocated to the stock. Remaining hedge funds that hold long positions include Michael Lowenstein’s Kensico Capital, Dan Loeb’s Third Point and Phill Gross and Robert Atchinson’s Adage Capital Management.
Now, some big names have been driving this bullishness. Kensico Capital, managed by Michael Lowenstein, established the largest position in Cheniere Energy, Inc. (NYSEAMEX:LNG). Kensico Capital had 113.6 million invested in the company at the end of the quarter. Eric Mindich’s Eton Park Capital also made a $82 million investment in the stock during the quarter. The following funds were also among the new LNG investors: Alan Fournier’s Pennant Capital Management, Bruce J. Richards and Louis Hanover’s Marathon Asset Management, and Jeffrey Bersh and Michael Wartell’s Venor Capital Management.
What do corporate executives and insiders think about Cheniere Energy, Inc. (NYSEAMEX:LNG)?
Insider trading activity, especially when it’s bullish, is particularly usable when the company in question has experienced transactions within the past six months. Over the latest 180-day time frame, Cheniere Energy, Inc. (NYSEAMEX:LNG) has seen zero unique insiders buying, and 12 insider sales (see the details of insider trades here).
Let’s check out hedge fund and insider activity 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 are in the oil & gas drilling & exploration industry and their market caps are similar to LNG’s market cap.