Is it smart to be bullish on Stone Energy Corporation (NYSE:SGY)?
To the average investor, there are many gauges market participants can use to track publicly traded companies. Some of the most innovative are hedge fund and insider trading sentiment. At Insider Monkey, our research analyses have shown that, historically, those who follow the best picks of the top hedge fund managers can trounce the broader indices by a healthy amount (see just how much).
Equally as useful, positive insider trading sentiment is another way to look at the world of equities. There are plenty of motivations for an executive to cut shares of his or her company, but just one, very obvious reason why they would initiate a purchase. Many empirical studies have demonstrated the market-beating potential of this method if "monkeys" know where to look (learn more here).
Keeping this in mind, it's important to examine the recent info surrounding Stone Energy Corporation (NYSE:SGY).
In preparation for the third quarter, a total of 19 of the hedge funds we track held long positions in this stock, a change of 19% from the previous quarter. With hedge funds' sentiment swirling, there exists an "upper tier" of noteworthy hedge fund managers who were boosting their holdings considerably.
Out of the hedge funds we follow, Israel Englander's Millennium Management had the most valuable position in Stone Energy Corporation (NYSE:SGY), worth close to $50.6 million, accounting for 0.2% of its total 13F portfolio. Sitting at the No. 2 spot is Highbridge Capital Management, managed by Glenn Russell Dubin, which held a $19.1 million position; the fund has 0.2% of its 13F portfolio invested in the stock. Some other peers that hold long positions include Chuck Royce's Royce & Associates, Paul Reeder and Edward Shapiro's PAR Capital Management and Cliff Asness's AQR Capital Management.
With a general bullishness amongst the titans, certain bigger names were leading the bulls' herd. Millennium Management, managed by Israel Englander, created the most outsized position in Stone Energy Corporation (NYSE:SGY). Millennium Management had 50.6 million invested in the company at the end of the quarter. Ken Griffin's Citadel Investment Group also made a $29.2 million investment in the stock during the quarter. The other funds with new positions in the stock are Glenn Russell Dubin's Highbridge Capital Management, Howard Marks's Oaktree Capital Management, and Chuck Royce's Royce & Associates.
Insider buying made by high-level executives is particularly usable when the company in focus has seen transactions within the past half-year. Over the latest 180-day time period, Stone Energy Corporation (NYSE:SGY) has seen zero unique insiders buying, and zero insider sales (see the details of insider trades here).
We'll also review the relationship between both of these indicators in other stocks similar to Stone Energy Corporation (NYSE:SGY). These stocks are LinnCo LLC (NASDAQ:LNCO), Diamondback Energy Inc (NASDAQ:FANG), QR Energy LP (NYSE:QRE), Carrizo Oil & Gas, Inc. (NASDAQ:CRZO), and EPL Oil & Gas Inc (NYSE:EPL). All of these stocks are in the independent oil & gas industry and their market caps are closest to SGY's market cap.