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Hedge Funds Are Buying Hercules Offshore, Inc. (HERO)

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Is Hercules Offshore, Inc. (NASDAQ:HERO) a first-rate investment now? The smart money is taking an optimistic view. The number of long hedge fund positions improved by 3 recently.

According to most traders, hedge funds are viewed as worthless, old investment vehicles of the past. While there are over 8000 funds with their doors open today, we hone in on the crème de la crème of this club, around 450 funds. It is estimated that this group controls the lion’s share of all hedge funds’ total capital, and by monitoring their best investments, we have formulated a few investment strategies that have historically outpaced the S&P 500 index. Our small-cap hedge fund strategy outperformed 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 (explore the details and some picks here).

Hercules Offshore, Inc. (NASDAQ:HERO)Just as beneficial, positive insider trading activity is a second way to parse down the world of equities. Just as you’d expect, there are a number of motivations for an upper level exec to drop shares of his or her company, but just one, very clear reason why they would behave bullishly. Many academic studies have demonstrated the valuable potential of this tactic if piggybackers know what to do (learn more here).

Now, let’s take a gander at the recent action surrounding Hercules Offshore, Inc. (NASDAQ:HERO).

How are hedge funds trading Hercules Offshore, Inc. (NASDAQ:HERO)?

Heading into Q2, a total of 19 of the hedge funds we track were bullish in this stock, a change of 19% from the first quarter. With the smart money’s sentiment swirling, there exists a few key hedge fund managers who were increasing their stakes significantly.

Of the funds we track, D. E. Shaw’s D E Shaw had the biggest position in Hercules Offshore, Inc. (NASDAQ:HERO), worth close to $33.1 million, accounting for 0.1% of its total 13F portfolio. The second largest stake is held by Millennium Management, managed by Israel Englander, which held a $29.4 million position; 0.1% of its 13F portfolio is allocated to the stock. Remaining peers that are bullish include Ken Griffin’s Citadel Investment Group, Dmitry Balyasny’s Balyasny Asset Management and Jim Simons’s Renaissance Technologies.

As aggregate interest increased, key money managers have jumped into Hercules Offshore, Inc. (NASDAQ:HERO) headfirst. Renaissance Technologies, managed by Jim Simons, established the biggest position in Hercules Offshore, Inc. (NASDAQ:HERO). Renaissance Technologies had 11.6 million invested in the company at the end of the quarter. Eric Sprott’s Sprott Asset Management also initiated a $0.7 million position during the quarter. The other funds with brand new HERO positions are Mark Rachesky’s MHR Fund Management, Glenn Russell Dubin’s Highbridge Capital Management, and Paul Tudor Jones’s Tudor Investment Corp.

How are insiders trading Hercules Offshore, Inc. (NASDAQ:HERO)?

Bullish insider trading is at its handiest when the primary stock in question has experienced transactions within the past six months. Over the last half-year time frame, Hercules Offshore, Inc. (NASDAQ:HERO) has experienced zero unique insiders buying, and 1 insider sales (see the details of insider trades here).

Let’s also take a look at hedge fund and insider activity in other stocks similar to Hercules Offshore, Inc. (NASDAQ:HERO). These stocks are Bill Barrett Corporation (NYSE:BBG), W&T Offshore, Inc. (NYSE:WTI), Crestwood Midstream Partners LP (NYSE:CMLP), Key Energy Services, Inc. (NYSE:KEG), and Seadrill Partners LLC (NYSE:SDLP). All of these stocks are in the oil & gas drilling & exploration industry and their market caps are closest to HERO’s market cap.

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