OGE Energy Corp. (NYSE:OGE) investors should pay attention to a decrease in hedge fund sentiment lately.
According to most investors, hedge funds are perceived as unimportant, old financial tools of yesteryear. While there are more than 8000 funds in operation at the moment, we look at the leaders of this club, about 450 funds. It is estimated that this group controls the majority of the hedge fund industry's total capital, and by paying attention to their highest performing picks, we have identified a few investment strategies that have historically outstripped the market. Our small-cap hedge fund strategy outpaced the S&P 500 index by 18 percentage points per year 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 outpaced the S&P 500 index by 23.3 percentage points in 8 months (see all of our picks from August).
Equally as important, positive insider trading activity is another way to parse down the stock market universe. Just as you'd expect, there are a number of stimuli for an upper level exec to downsize shares of his or her company, but just one, very simple reason why they would behave bullishly. Many academic studies have demonstrated the impressive potential of this tactic if you know where to look (learn more here).
Keeping this in mind, let's take a peek at the key action encompassing OGE Energy Corp. (NYSE:OGE).
At the end of the first quarter, a total of 8 of the hedge funds we track were long in this stock, a change of -33% from the first quarter. With the smart money's positions undergoing their usual ebb and flow, there exists a few key hedge fund managers who were increasing their holdings meaningfully.
When looking at the hedgies we track, Israel Englander's Millennium Management had the most valuable position in OGE Energy Corp. (NYSE:OGE), worth close to $51.7 million, comprising 0.2% of its total 13F portfolio. Coming in second is Dmitry Balyasny of Balyasny Asset Management, with a $48 million position; the fund has 0.7% of its 13F portfolio invested in the stock. Remaining hedge funds that hold long positions include Daniel S. Och's OZ Management, Phill Gross and Robert Atchinson's Adage Capital Management and Cliff Asness's AQR Capital Management.
Because OGE Energy Corp. (NYSE:OGE) has faced falling interest from the smart money, logic holds that there exists a select few hedgies who sold off their full holdings last quarter. Intriguingly, Charles Clough's Clough Capital Partners dropped the largest investment of the 450+ funds we monitor, totaling an estimated $19.2 million in stock., and Matthew Tewksbury of Stevens Capital Management was right behind this move, as the fund said goodbye to about $3.1 million worth. These moves are intriguing to say the least, as total hedge fund interest was cut by 4 funds last quarter.
Bullish insider trading is particularly usable when the company in focus has seen transactions within the past 180 days. Over the last half-year time period, OGE Energy Corp. (NYSE:OGE) has experienced zero unique insiders buying, and 11 insider sales (see the details of insider trades here).
Let's go over hedge fund and insider activity in other stocks similar to OGE Energy Corp. (NYSE:OGE). These stocks are Brookfield Infrastructure Partners L.P. (NYSE:BIP), Alliant Energy Corporation (NYSE:LNT), Pinnacle West Capital Corporation (NYSE:PNW), CMS Energy Corporation (NYSE:CMS), and SCANA Corporation (NYSE:SCG). This group of stocks belong to the electric utilities industry and their market caps resemble OGE's market cap.