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Energy XXI (Bermuda) Limited (NASDAQ:EXXI): Insiders Are Buying, Should You?

Energy XXI (Bermuda) Limited (NASDAQ:EXXI) was in 21 hedge funds’ portfolio at the end of December. EXXI has experienced a decrease in enthusiasm from smart money of late. There were 23 hedge funds in our database with EXXI holdings at the end of the previous quarter.

At the moment, there are many indicators market participants can use to analyze stocks. A couple of the most under-the-radar are hedge fund and insider trading sentiment. At Insider Monkey, our research analyses have shown that, historically, those who follow the top picks of the top hedge fund managers can trounce the S&P 500 by a very impressive amount (see just how much).

Equally as beneficial, positive insider trading sentiment is another way to break down the world of equities. Obviously, there are plenty of incentives for an executive to cut shares of his or her company, but only one, very simple reason why they would buy. Plenty of empirical studies have demonstrated the valuable potential of this method if investors understand what to do (learn more here).

Now, let’s take a glance at the latest action regarding Energy XXI (Bermuda) Limited (NASDAQ:EXXI).

How have hedgies been trading Energy XXI (Bermuda) Limited (NASDAQ:EXXI)?

At the end of the fourth quarter, a total of 21 of the hedge funds we track were long in this stock, a change of -9% from the previous quarter. With hedge funds’ sentiment swirling, there exists a few key hedge fund managers who were boosting their holdings meaningfully.

Of the funds we track, Mark McGoldrick and Jason Maynard’s Mouth Kellett Capital Management had the largest position in Energy XXI (Bermuda) Limited (NASDAQ:EXXI), worth close to $191 million, accounting for 24.3% of its total 13F portfolio. The second largest stake is held by Steven Cohen of SAC Capital Advisors, with a $98 million position; the fund has 0.5% of its 13F portfolio invested in the stock. Remaining hedge funds with similar optimism include Leon Cooperman’s Omega Advisors, Kevin D. Eng’s Columbus Hill Capital Management and Don Morgan’s Brigade Capital.

Since Energy XXI (Bermuda) Limited (NASDAQ:EXXI) has faced bearish sentiment from the smart money, we can see that there were a few hedge funds that elected to cut their full holdings heading into 2013. Interestingly, Paul Singer’s Elliott Management sold off the biggest stake of the “upper crust” of funds we watch, comprising an estimated $105 million in stock., and Rishi Bajaj, Toby Symonds, and Steve Tesoriere of Altai Capital was right behind this move, as the fund sold off about $16 million worth. These transactions are important to note, as aggregate hedge fund interest fell by 2 funds heading into 2013.

What do corporate executives and insiders think about Energy XXI (Bermuda) Limited (NASDAQ:EXXI)?

Insider trading activity, especially when it’s bullish, is at its handiest when the primary stock in question has experienced transactions within the past 180 days. Over the latest six-month time frame, Energy XXI (Bermuda) Limited (NASDAQ:EXXI) has seen 5 unique insiders buying, and 5 insider sales (see the details of insider trades here).

With the returns exhibited by the aforementioned studies, everyday investors must always watch hedge fund and insider trading activity, and Energy XXI (Bermuda) Limited (NASDAQ:EXXI) is an important part of this process.

Click here to learn more about Insider Monkey’s Hedge Fund Newsletter

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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