Is Energy Transfer Equity, L.P. (NYSE:ETE) a buy right now? The smart money is becoming less hopeful. The number of bullish hedge fund positions went down by 2 recently.
According to most market participants, hedge funds are assumed to be unimportant, old financial vehicles of years past. While there are greater than 8000 funds with their doors open at present, we choose to focus on the elite of this club, about 450 funds. It is estimated that this group oversees the majority of the smart money’s total asset base, and by paying attention to their best stock picks, we have figured out a number of investment strategies that have historically beaten the market. Our small-cap hedge fund strategy outpaced the S&P 500 index by 18 percentage points per annum 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 (see all of our picks from August).
Equally as key, optimistic insider trading sentiment is another way to break down the marketplace. Just as you’d expect, there are a variety of stimuli for an upper level exec to downsize shares of his or her company, but only one, very clear reason why they would initiate a purchase. Several empirical studies have demonstrated the impressive potential of this strategy if piggybackers understand where to look (learn more here).
Now, it’s important to take a gander at the recent action regarding Energy Transfer Equity, L.P. (NYSE:ETE).
What does the smart money think about Energy Transfer Equity, L.P. (NYSE:ETE)?
At the end of the first quarter, a total of 12 of the hedge funds we track were bullish in this stock, a change of -14% from the previous quarter. With hedge funds’ sentiment swirling, there exists a few notable hedge fund managers who were upping their holdings considerably.
When looking at the hedgies we track, Kenneth Mario Garschina’s Mason Capital Management had the biggest position in Energy Transfer Equity, L.P. (NYSE:ETE), worth close to $476.5 million, accounting for 11.9% of its total 13F portfolio. The second largest stake is held by Daniel S. Och of OZ Management, with a $134.6 million position; the fund has 0.5% of its 13F portfolio invested in the stock. Some other hedge funds with similar optimism include Chuck Royce’s Royce & Associates, Richard Driehaus’s Driehaus Capital and Alec Litowitz and Ross Laser’s Magnetar Capital.
Judging by the fact that Energy Transfer Equity, L.P. (NYSE:ETE) has witnessed bearish sentiment from the smart money, it’s safe to say that there is a sect of money managers who sold off their positions entirely in Q1. It’s worth mentioning that Sean Cullinan’s Point State Capital dumped the largest position of all the hedgies we monitor, comprising an estimated $56.9 million in call options, and Jean-Marie Eveillard of First Eagle Investment Management was right behind this move, as the fund sold off about $16.2 million worth. These moves are intriguing to say the least, as total hedge fund interest dropped by 2 funds in Q1.
How have insiders been trading Energy Transfer Equity, L.P. (NYSE:ETE)?
Bullish insider trading is particularly usable when the company in focus has seen transactions within the past half-year. Over the latest half-year time period, Energy Transfer Equity, L.P. (NYSE:ETE) has seen 1 unique insiders buying, and zero insider sales (see the details of insider trades here).
Let’s go over hedge fund and insider activity in other stocks similar to Energy Transfer Equity, L.P. (NYSE:ETE). These stocks are Magellan Midstream Partners, L.P. (NYSE:MMP), Oneok Partners LP (NYSE:OKS), Spectra Energy Corp. (NYSE:SE), Plains All American Pipeline, L.P. (NYSE:PAA), and Energy Transfer Partners LP (NYSE:ETP). All of these stocks are in the oil & gas pipelines industry and their market caps are similar to ETE’s market cap.