Rosetta Resources Inc. (NASDAQ:ROSE) investors should pay attention to an increase in activity from the world’s largest hedge funds of late.
In the eyes of most market participants, hedge funds are viewed as unimportant, old investment tools of the past. While there are over 8000 funds with their doors open at the moment, we look at the masters of this club, around 450 funds. Most estimates calculate that this group controls most of the hedge fund industry’s total capital, and by tracking their top stock picks, we have unearthed a number of investment strategies that have historically beaten 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 began to sharing our picks with our subscribers at the end of August 2012, we have outpaced the S&P 500 index by 23.3 percentage points in 8 months (explore the details and some picks here).
Equally as beneficial, optimistic insider trading activity is another way to parse down the stock market universe. There are many incentives for a corporate insider to cut shares of his or her company, but only one, very obvious reason why they would behave bullishly. Many empirical studies have demonstrated the useful potential of this strategy if piggybackers understand where to look (learn more here).
Keeping this in mind, it’s important to take a gander at the recent action surrounding Rosetta Resources Inc. (NASDAQ:ROSE).
How are hedge funds trading Rosetta Resources Inc. (NASDAQ:ROSE)?
Heading into Q2, a total of 18 of the hedge funds we track were long in this stock, a change of 20% from one quarter earlier. With the smart money’s positions undergoing their usual ebb and flow, there exists a select group of key hedge fund managers who were boosting their holdings substantially.
According to our comprehensive database, Robert Rodriguez and Steven Romick’s First Pacific Advisors LLC had the largest position in Rosetta Resources Inc. (NASDAQ:ROSE), worth close to $113.1 million, comprising 1.2% of its total 13F portfolio. The second largest stake is held by Jim Simons of Renaissance Technologies, with a $33.4 million position; the fund has 0.1% of its 13F portfolio invested in the stock. Some other peers that are bullish include Robert Rodriguez and Steven Romick’s First Pacific Advisors LLC, John Overdeck and David Siegel’s Two Sigma Advisors and Steven Cohen’s SAC Capital Advisors.
As aggregate interest increased, some big names have jumped into Rosetta Resources Inc. (NASDAQ:ROSE) headfirst. First Pacific Advisors LLC, managed by Robert Rodriguez and Steven Romick, initiated the largest position in Rosetta Resources Inc. (NASDAQ:ROSE). First Pacific Advisors LLC had 113.1 million invested in the company at the end of the quarter. Robert Rodriguez and Steven Romick’s First Pacific Advisors LLC also initiated a $28.7 million position during the quarter. The following funds were also among the new ROSE investors: Ric Dillon’s Diamond Hill Capital, Matthew Tewksbury’s Stevens Capital Management, and John Zaro’s Bourgeon Capital.
What have insiders been doing with Rosetta Resources Inc. (NASDAQ:ROSE)?
Insider buying is particularly usable when the primary stock in question has seen transactions within the past half-year. Over the latest six-month time period, Rosetta Resources Inc. (NASDAQ:ROSE) has experienced zero unique insiders buying, and zero insider sales (see the details of insider trades here).
Let’s also review hedge fund and insider activity in other stocks similar to Rosetta Resources Inc. (NASDAQ:ROSE). These stocks are Ultra Petroleum Corp. (NYSE:UPL), Newfield Exploration Co. (NYSE:NFX), Mcmoran Exploration Co (NYSE:MMR), Laredo Petroleum Holdings Inc (NYSE:LPI), and Berry Petroleum Company (NYSE:BRY). This group of stocks belong to the independent oil & gas industry and their market caps are similar to ROSE’s market cap.