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Energy XXI (Bermuda) Limited (EXXI): Insiders and Hedge Funds Aren’t Crazy About It

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In the eyes of many investors, hedge funds are assumed to be delayed, old investment vehicles of an era lost to time. Although there are more than 8,000 hedge funds with their doors open in present day, this site aim at the top tier of this club, about 525 funds. It is widely held that this group oversees the lion’s share of the hedge fund industry’s total assets, and by monitoring their best investments, we’ve determined a number of investment strategies that have historically outperformed the S&P 500. Our small-cap hedge fund strategy beat 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 33 percentage points in 11 months (see all of our picks from August).

Just as key, positive insider trading sentiment is another way to analyze the world of equities. Obviously, there are lots of reasons for a corporate insider to drop shares of his or her company, but just one, very simple reason why they would behave bullishly. Many empirical studies have demonstrated the impressive potential of this method if “monkeys” understand what to do (learn more here).

Energy XXI (Bermuda) Limited (NASDAQ:EXXI)

Now that that’s out of the way, we’re going to discuss the latest info about Energy XXI (Bermuda) Limited (NASDAQ:EXXI).

Hedge fund activity in Energy XXI (Bermuda) Limited (NASDAQ:EXXI)

Heading into Q3, a total of 25 of the hedge funds we track held long positions in this stock, a change of 0% from one quarter earlier. With hedgies’ capital changing hands, there exists a few noteworthy hedge fund managers who were upping their holdings substantially.

When using filings from the hedgies we track, Mark McGoldrick and Jason Maynard’s Mouth Kellett Capital Management had the most valuable position in Energy XXI (Bermuda) Limited (NASDAQ:EXXI), worth close to $131.4 million, comprising 15.8% of its total 13F portfolio. The second largest stake is held by Steven Cohen of SAC Capital Advisors, with a $46.9 million position; the fund has 0.3% of its 13F portfolio invested in the stock. Other hedge funds that are bullish include Richard Perry’s Perry Capital, Leon Cooperman’s Omega Advisors and Cliff Asness’s AQR Capital Management.

Judging by the fact that Energy XXI (Bermuda) Limited (NASDAQ:EXXI) has witnessed a fall in interest from the top-tier hedge fund industry, logic holds that there exists a select few money managers that slashed their full holdings in Q1. It’s worth mentioning that Ken Griffin’s Citadel Investment Group dropped the largest stake of the 450+ funds we watch, totaling close to $31.1 million in stock, and David Dreman of Dreman Value Management was right behind this move, as the fund said goodbye to about $2.5 million worth. These moves are interesting, as aggregate hedge fund interest stayed the same (this is a bearish signal in our experience).

What have insiders been doing with Energy XXI (Bermuda) Limited (NASDAQ:EXXI)?

Legal insider trading, particularly when it’s bullish, is particularly usable when the primary stock in question has seen transactions within the past six months. Over the last 180-day time frame, Energy XXI (Bermuda) Limited (NASDAQ:EXXI) has experienced zero unique insiders buying, and zero insider sales (see the details of insider trades here).

We’ll also examine the relationship between both of these indicators in other stocks similar to Energy XXI (Bermuda) Limited (NASDAQ:EXXI). These stocks are Forum Energy Technologies Inc (NYSE:FET), Precision Drilling Corp (USA) (NYSE:PDS), Helix Energy Solutions Group Inc. (NYSE:HLX), Lufkin Industries, Inc. (NASDAQ:LUFK), and CARBO Ceramics Inc. (NYSE:CRR). All of these stocks are in the oil & gas equipment & services industry and their market caps match EXXI’s market cap.

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