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Hedge Funds Aren’t Crazy About Unit Corporation (UNT) Anymore: BreitBurn Energy Partners L.P. (BBEP), Kodiak Oil & Gas Corp (USA) (KOG)

Unit Corporation (NYSE:UNT) was in 9 hedge funds’ portfolio at the end of December. UNT has seen a decrease in hedge fund interest in recent months. There were 11 hedge funds in our database with UNT holdings at the end of the previous quarter.

Unit Corporation (NYSE:UNT)In the eyes of most market participants, hedge funds are viewed as underperforming, outdated investment tools of years past. While there are over 8000 funds trading at present, we look at the elite of this group, about 450 funds. It is widely believed that this group has its hands on the lion’s share of all hedge funds’ total capital, and by watching their top picks, we have uncovered a few investment strategies that have historically outpaced the broader indices. 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 beaten the S&P 500 index by 24 percentage points in 7 months (check out a sample of our picks).

Equally as beneficial, positive insider trading sentiment is another way to parse down the investments you’re interested in. Just as you’d expect, there are a variety of motivations for an executive to get rid of shares of his or her company, but only one, very simple reason why they would buy. Plenty of academic studies have demonstrated the market-beating potential of this tactic if investors know what to do (learn more here).

Now, we’re going to take a look at the recent action regarding Unit Corporation (NYSE:UNT).

What have hedge funds been doing with Unit Corporation (NYSE:UNT)?

At the end of the fourth quarter, a total of 9 of the hedge funds we track were bullish in this stock, a change of -18% from the third quarter. With hedgies’ sentiment swirling, there exists an “upper tier” of noteworthy hedge fund managers who were upping their holdings meaningfully.

Of the funds we track, Chuck Royce’s Royce & Associates had the biggest position in Unit Corporation (NYSE:UNT), worth close to $324 million, comprising 1.1% of its total 13F portfolio. Coming in second is Cliff Asness of AQR Capital Management, with a $9 million position; the fund has 0% of its 13F portfolio invested in the stock. Remaining hedge funds that hold long positions include Jim Simons’s Renaissance Technologies, D. E. Shaw’s D E Shaw and Paul Tudor Jones’s Tudor Investment Corp.

Since Unit Corporation (NYSE:UNT) has experienced bearish sentiment from the entirety of the hedge funds we track, logic holds that there were a few fund managers that slashed their positions entirely last quarter. Intriguingly, Peter Rathjens, Bruce Clarke and John Campbell’s Arrowstreet Capital said goodbye to the biggest stake of all the hedgies we monitor, worth an estimated $3 million in stock., and Israel Englander of Millennium Management was right behind this move, as the fund sold off about $2 million worth. These moves are interesting, as total hedge fund interest dropped by 2 funds last quarter.

What do corporate executives and insiders think about Unit Corporation (NYSE:UNT)?

Insider purchases made by high-level executives is particularly usable when the primary stock in question has experienced transactions within the past half-year. Over the last half-year time frame, Unit Corporation (NYSE:UNT) has seen zero unique insiders buying, and 5 insider sales (see the details of insider trades here).

Let’s check out hedge fund and insider activity in other stocks similar to Unit Corporation (NYSE:UNT). These stocks are BreitBurn Energy Partners L.P. (NASDAQ:BBEP), Kodiak Oil & Gas Corp (USA) (NYSE:KOG), Ocean Rig UDW Inc (NASDAQ:ORIG), EV Energy Partners, L.P. (NASDAQ:EVEP), and Pacific Drilling SA (NYSE:PACD). This group of stocks belong to the oil & gas drilling & exploration industry and their market caps match UNT’s market cap.

Company Name # of Hedge Funds # of Insiders Buying # of Insiders Selling
BreitBurn Energy Partners L.P. (NASDAQ:BBEP) 5 0 3
Kodiak Oil & Gas Corp (USA) (NYSE:KOG) 17 0 6
Ocean Rig UDW Inc (NASDAQ:ORIG) 5 0 0
EV Energy Partners, L.P. (NASDAQ:EVEP) 3 0 0
Pacific Drilling SA (NYSE:PACD) 10 0 0

With the results shown by the aforementioned studies, retail investors must always watch hedge fund and insider trading sentiment, and Unit Corporation (NYSE:UNT) shareholders fit into this picture quite nicely.

Click here to learn why you should track hedge funds

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