Transocean LTD (NYSE:RIG) was in 35 hedge funds' portfolio at the end of the fourth quarter of 2012. RIG has seen a decrease in hedge fund sentiment recently. There were 39 hedge funds in our database with RIG positions at the end of the previous quarter.
To most market participants, hedge funds are viewed as unimportant, old financial tools of the past. While there are over 8000 funds in operation at the moment, we choose to focus on the elite of this club, around 450 funds. It is widely believed that this group has its hands on the majority of all hedge funds' total capital, and by tracking their best stock picks, we have identified a few investment strategies that have historically outperformed Mr. Market. Our small-cap hedge fund strategy beat 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 outperformed the S&P 500 index by 25 percentage points in 6.5 month (see the details here).
Just as important, bullish insider trading sentiment is a second way to break down the stock market universe. Obviously, there are many incentives for an executive to get rid of shares of his or her company, but only one, very simple reason why they would initiate a purchase. Many academic studies have demonstrated the valuable potential of this method if piggybackers understand what to do (learn more here).
Consequently, we're going to take a gander at the key action surrounding Transocean LTD (NYSE:RIG).
At the end of the fourth quarter, a total of 35 of the hedge funds we track were long in this stock, a change of -10% from the third quarter. With hedge funds' sentiment swirling, there exists an "upper tier" of noteworthy hedge fund managers who were boosting their stakes considerably.
Of the funds we track, Icahn Capital LP, managed by Carl Icahn, holds the largest position in Transocean LTD (NYSE:RIG). Icahn Capital LP has a $261 million billion position in the stock, comprising 2% of its 13F portfolio. Sitting at the No. 2 spot is Omega Advisors, managed by Leon Cooperman, which held a $139 million position; the fund has 2.6% of its 13F portfolio invested in the stock. Some other hedgies that are bullish include Clint Carlson's Carlson Capital, David Tepper's Appaloosa Management LP and Glenn Russell Dubin's Highbridge Capital Management.
Judging by the fact that Transocean LTD (NYSE:RIG) has experienced falling interest from the aggregate hedge fund industry, logic holds that there were a few hedge funds that slashed their entire stakes in Q4. Interestingly, Malcolm Fairbairn's Ascend Capital cut the largest stake of all the hedgies we key on, valued at an estimated $67 million in stock.. Richard Schimel's fund, Diamondback Capital, also cut its stock, about $44 million worth. These moves are interesting, as aggregate hedge fund interest dropped by 4 funds in Q4.
Bullish insider trading is at its handiest when the company in focus has seen transactions within the past six months. Over the last six-month time period, Transocean LTD (NYSE:RIG) has experienced zero unique insiders purchasing, and 2 insider sales (see the details of insider trades here).
With the results demonstrated by our research, everyday investors must always keep an eye on hedge fund and insider trading activity, and Transocean LTD (NYSE:RIG) is an important part of this process.
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