National Fuel Gas Co. (NYSE:NFG) was in 12 hedge funds' portfolio at the end of March. NFG shareholders have witnessed a decrease in support from the world's most elite money managers of late. There were 16 hedge funds in our database with NFG holdings at the end of the previous quarter.
According to most traders, hedge funds are seen as underperforming, old investment tools of the past. While there are greater than 8000 funds with their doors open today, we look at the elite of this group, about 450 funds. It is widely believed that this group oversees most of all hedge funds' total asset base, and by watching their best stock picks, we have determined a few investment strategies that have historically outstripped the broader indices. Our small-cap hedge fund strategy beat the S&P 500 index by 18 percentage points per annum 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 trumped the S&P 500 index by 23.3 percentage points in 8 months (see all of our picks from August).
Equally as beneficial, positive insider trading activity is a second way to parse down the marketplace. As the old adage goes: there are a variety of stimuli for an insider to cut shares of his or her company, but just one, very clear reason why they would buy. Many empirical studies have demonstrated the useful potential of this strategy if investors understand what to do (learn more here).
Consequently, let's take a glance at the recent action regarding National Fuel Gas Co. (NYSE:NFG).
In preparation for this quarter, a total of 12 of the hedge funds we track were bullish in this stock, a change of -25% from the previous quarter. With hedge funds' sentiment swirling, there exists an "upper tier" of notable hedge fund managers who were boosting their stakes meaningfully.
When looking at the hedgies we track, Mario Gabelli's GAMCO Investors had the biggest position in National Fuel Gas Co. (NYSE:NFG), worth close to $233.8 million, accounting for 1.5% of its total 13F portfolio. Sitting at the No. 2 spot is Valinor Management LLC, managed by David Gallo, which held a $51.1 million position; 2.2% of its 13F portfolio is allocated to the stock. Remaining peers that hold long positions include Gregg J. Powers's Private Capital Management, George Soros's Soros Fund Management and Charles Clough's Clough Capital Partners.
Because National Fuel Gas Co. (NYSE:NFG) has faced a declination in interest from the aggregate hedge fund industry, it's safe to say that there is a sect of funds who sold off their positions entirely last quarter. It's worth mentioning that Daniel S. Och's OZ Management dumped the biggest investment of the "upper crust" of funds we watch, valued at close to $55.9 million in stock., and Israel Englander of Millennium Management was right behind this move, as the fund dropped about $8.3 million worth. These bearish behaviors are intriguing to say the least, as aggregate hedge fund interest fell by 4 funds last quarter.
Insider trading activity, especially when it's bullish, is particularly usable when the company in question has seen transactions within the past six months. Over the last half-year time frame, National Fuel Gas Co. (NYSE:NFG) has experienced zero unique insiders purchasing, and 2 insider sales (see the details of insider trades here).
Let's also examine hedge fund and insider activity in other stocks similar to National Fuel Gas Co. (NYSE:NFG). These stocks are SM Energy Co. (NYSE:SM), Cimarex Energy Co (NYSE:XEC), Plains Exploration & Production Company (NYSE:PXP), Kosmos Energy Ltd (NYSE:KOS), and Baytex Energy Corp (USA) (NYSE:BTE). This group of stocks are the members of the independent oil & gas industry and their market caps are similar to NFG's market cap.