Is Calpine Corporation (NYSE:CPN) the right pick for your portfolio? Money managers are getting less optimistic. The number of bullish hedge fund positions were cut by 8 in recent months.
In the 21st century investor’s toolkit, there are plenty of gauges market participants can use to watch stocks. A duo of the best are hedge fund and insider trading interest. At Insider Monkey, our research analyses have shown that, historically, those who follow the top picks of the elite fund managers can trounce their index-focused peers by a very impressive margin (see just how much).
Equally as key, bullish insider trading activity is a second way to break down the world of equities. Just as you’d expect, there are many stimuli for an insider to sell shares of his or her company, but just one, very simple reason why they would buy. Several empirical studies have demonstrated the market-beating potential of this strategy if “monkeys” know what to do (learn more here).
Keeping this in mind, let’s take a glance at the key action regarding Calpine Corporation (NYSE:CPN).
Hedge fund activity in Calpine Corporation (NYSE:CPN)
At the end of the fourth quarter, a total of 22 of the hedge funds we track were long in this stock, a change of -27% from one quarter earlier. With the smart money’s positions undergoing their usual ebb and flow, there exists a select group of noteworthy hedge fund managers who were boosting their stakes considerably.
When looking at the hedgies we track, John H. Scully’s SPO Advisory Corp had the biggest position in Calpine Corporation (NYSE:CPN), worth close to $1.011 billion, comprising 15.9% of its total 13F portfolio. On SPO Advisory Corp’s heels is First Eagle Investment Management, managed by Jean-Marie Eveillard, which held a $86 million position; 0.1% of its 13F portfolio is allocated to the stock. Other peers that are bullish include Richard Perry’s Perry Capital, Clint Carlson’s Carlson Capital and John A. Levin’s Levin Capital Strategies.
Because Calpine Corporation (NYSE:CPN) has witnessed falling interest from hedge fund managers, it’s easy to see that there is a sect of hedgies that slashed their full holdings in Q4. It’s worth mentioning that Kenneth Mario Garschina’s Mason Capital Management dumped the biggest position of all the hedgies we track, worth an estimated $119 million in stock.. Dmitry Balyasny’s fund, Balyasny Asset Management, also dropped its call options., about $25 million worth. These transactions are interesting, as total hedge fund interest dropped by 8 funds in Q4.
How have insiders been trading Calpine Corporation (NYSE:CPN)?
Bullish insider trading is best served when the company in question has seen transactions within the past 180 days. Over the last 180-day time frame, Calpine Corporation (NYSE:CPN) has experienced zero unique insiders purchasing, and zero insider sales (see the details of insider trades here).
With the results demonstrated by Insider Monkey’s strategies, everyday investors should always pay attention to hedge fund and insider trading activity, and Calpine Corporation (NYSE:CPN) applies perfectly to this mantra.
Insider Monkey’s small-cap strategy returned 29.2% between September 2012 and February 2013 versus 8.7% for the S&P 500 index. Try it now by clicking the link above.