Is it smart to be bullish on Alon USA Energy, Inc. (NYSE:ALJ)?
Now, according to many traders, hedge funds are assumed to be useless, outdated financial tools of a forgotten age. Although there are In excess of 8,000 hedge funds trading currently, this site focuses on the aristocrats of this club, around 525 funds. Analysts calculate that this group controls the majority of all hedge funds’ total capital, and by tracking their best stock picks, we’ve formulated a number of investment strategies that have historically outperformed Mr. Market. Our small-cap hedge fund strategy outstripped 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 33 percentage points in 11 months (explore the details and some picks here).
Just as crucial, optimistic insider trading sentiment is a second way to analyze the investments you’re interested in. Just as you’d expect, there are a number of reasons for an insider to cut shares of his or her company, but only one, very clear reason why they would behave bullishly. Various empirical studies have demonstrated the market-beating potential of this tactic if investors know what to do (learn more here).
What’s more, it’s important to analyze the latest info about Alon USA Energy, Inc. (NYSE:ALJ).
How are hedge funds trading Alon USA Energy, Inc. (NYSE:ALJ)?
At the end of the second quarter, a total of 15 of the hedge funds we track held long positions in this stock, a change of -6% from the previous quarter. With the smart money’s sentiment swirling, there exists an “upper tier” of key hedge fund managers who were boosting their holdings considerably.
When using filings from the hedgies we track, Highbridge Capital Management, managed by Glenn Russell Dubin, holds the largest position in Alon USA Energy, Inc. (NYSE:ALJ). Highbridge Capital Management has a $10.8 million position in the stock, comprising 0.1% of its 13F portfolio. Sitting at the No. 2 spot is Renaissance Technologies, managed by Jim Simons, which held a $8 million position; the fund has less than 0.1%% of its 13F portfolio invested in the stock. Other hedge funds that are bullish include Joel Greenblatt’s Gotham Asset Management, Ken Griffin’s Citadel Investment Group and Israel Englander’s Millennium Management.
Because Alon USA Energy, Inc. (NYSE:ALJ) has witnessed a fall in interest from the smart money’s best and brightest, it’s safe to say that there was a specific group of funds who sold off their positions entirely at the end of the second quarter. Interestingly, Steven Cohen’s SAC Capital Advisors cut the largest investment of all the hedgies we monitor, comprising an estimated $0.5 million in stock. Gregory Fraser, Rudolph Kluiber, and Timothy Kroch’s fund, GRT Capital Partners, also dropped its stock, about $0.2 million worth. These transactions are interesting, as aggregate hedge fund interest was cut by 1 funds at the end of the second quarter.
Insider trading activity in Alon USA Energy, Inc. (NYSE:ALJ)
Insider buying is best served when the company in question has seen transactions within the past six months. Over the last six-month time period, Alon USA Energy, Inc. (NYSE:ALJ) has experienced zero unique insiders purchasing, 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 Alon USA Energy, Inc. (NYSE:ALJ). These stocks are Alon USA Partners LP (NYSE:ALDW), Eagle Rock Energy Partners, L.P. (NASDAQ:EROC), Crosstex Energy Inc (NASDAQ:XTXI), NGL Energy Partners LP (NYSE:NGL), and Ferrellgas Partners, L.P. (NYSE:FGP). This group of stocks are the members of the oil & gas refining & marketing industry and their market caps are similar to ALJ’s market cap.
| Company Name | # of Hedge Funds | # of Insiders Buying | # of Insiders Selling |
| Alon USA Partners LP (NYSE:ALDW) | 0 | 0 | |
| Eagle Rock Energy Partners, L.P. (NASDAQ:EROC) | 3 | 0 | 0 |
| Crosstex Energy Inc (NASDAQ:XTXI) | 12 | 0 | 0 |
| NGL Energy Partners LP (NYSE:NGL) | 0 | 0 | |
| Ferrellgas Partners, L.P. (NYSE:FGP) | 0 | 0 |
Using the returns shown by Insider Monkey’s research, regular investors must always watch hedge fund and insider trading sentiment, and Alon USA Energy, Inc. (NYSE:ALJ) shareholders fit into this picture quite nicely.
