Is Kinder Morgan Inc (NYSE:KMI) a buy here? Hedge funds are selling. The number of bullish hedge fund positions stayed the same which is a slightly negative development in our experience
At the moment, there are tons of gauges shareholders can use to track the equity markets. A duo of the most innovative are hedge fund and insider trading interest. At Insider Monkey, our studies have shown that, historically, those who follow the top picks of the best hedge fund managers can outperform the market by a superb amount (see just how much).
Just as beneficial, bullish insider trading activity is another way to parse down the investments you’re interested in. There are plenty of incentives for a corporate insider to cut shares of his or her company, but just one, very clear reason why they would initiate a purchase. Plenty of empirical studies have demonstrated the valuable potential of this strategy if you know what to do (learn more here).
Keeping this in mind, it’s important to take a gander at the recent action regarding Kinder Morgan Inc (NYSE:KMI).
How are hedge funds trading Kinder Morgan Inc (NYSE:KMI)?
At the end of the first quarter, a total of 54 of the hedge funds we track were bullish in this stock, a change of 0% from one quarter earlier. With hedge funds’ sentiment swirling, there exists an “upper tier” of noteworthy hedge fund managers who were increasing their holdings substantially.
Of the funds we track, Lone Pine Capital, managed by Stephen Mandel, holds the most valuable position in Kinder Morgan Inc (NYSE:KMI). Lone Pine Capital has a $534.5 million position in the stock, comprising 2.8% of its 13F portfolio. On Lone Pine Capital’s heels is Lone Pine Capital, managed by Stephen Mandel, which held a $318.6 million position; 1.7% of its 13F portfolio is allocated to the stock. Other peers that are bullish include Leon Cooperman’s Omega Advisors, Michael Lowenstein’s Kensico Capital and Thomas Steyer’s Farallon Capital.
Since Kinder Morgan Inc (NYSE:KMI) has experienced falling interest from hedge fund managers, we can see that there lies a certain “tier” of fund managers who were dropping their entire stakes at the end of the first quarter. Intriguingly, Bain Capital’s Brookside Capital dropped the biggest stake of the “upper crust” of funds we monitor, valued at close to $180.9 million in stock., and Jeffrey Tannenbaum of Fir Tree was right behind this move, as the fund said goodbye to about $15.2 million worth. These transactions are intriguing to say the least, as total hedge fund interest stayed the same (this is a bearish signal in our experience).
What do corporate executives and insiders think about Kinder Morgan Inc (NYSE:KMI)?
Bullish insider trading is best served when the company we’re looking at has experienced transactions within the past six months. Over the last half-year time period, Kinder Morgan Inc (NYSE:KMI) has seen zero unique insiders buying, and zero insider sales (see the details of insider trades here).
Let’s also take a look at hedge fund and insider activity in other stocks similar to Kinder Morgan Inc (NYSE:KMI). These stocks are Plains All American Pipeline, L.P. (NYSE:PAA), Spectra Energy Corp. (NYSE:SE), Williams Companies, Inc. (NYSE:WMB), Kinder Morgan Energy Partners LP (NYSE:KMP), and Enbridge Inc (USA) (NYSE:ENB). All of these stocks are in the oil & gas pipelines industry and their market caps are closest to KMI’s market cap.