Ultra Petroleum Corp. (NYSE:UPL) investors should be aware of a decrease in activity from the world's largest hedge funds of late.
To most stock holders, hedge funds are viewed as unimportant, outdated financial vehicles of yesteryear. While there are over 8000 funds in operation today, we at Insider Monkey choose to focus on the bigwigs of this club, around 450 funds. Most estimates calculate that this group oversees the majority of the smart money's total asset base, and by keeping an eye on their best investments, we have figured out a few investment strategies that have historically outpaced the S&P 500 index. Our small-cap hedge fund strategy outstripped the S&P 500 index by 18 percentage points a 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 trumped the S&P 500 index by 24 percentage points in 7 months (check out a sample of our picks).
Equally as important, positive insider trading activity is a second way to break down the world of equities. Just as you'd expect, there are many motivations for an insider to drop shares of his or her company, but just one, very simple reason why they would buy. Plenty of academic studies have demonstrated the impressive potential of this strategy if shareholders understand where to look (learn more here).
Keeping this in mind, let's take a look at the key action regarding Ultra Petroleum Corp. (NYSE:UPL).
At year's end, a total of 19 of the hedge funds we track were bullish in this stock, a change of 0% from the previous quarter. With hedge funds' positions undergoing their usual ebb and flow, there exists an "upper tier" of key hedge fund managers who were upping their holdings meaningfully.
When looking at the hedgies we track, Bruce J. Richards and Louis Hanover's Marathon Asset Management had the most valuable position in Ultra Petroleum Corp. (NYSE:UPL), worth close to $45.9 million, accounting for 1.4% of its total 13F portfolio. Sitting at the No. 2 spot is Ron Gutfleish of Elm Ridge Capital, with a $21.2 million position; 2.4% of its 13F portfolio is allocated to the stock. Other hedgies that hold long positions include Gregg J. Powers's Private Capital Management, Israel Englander's Millennium Management and Kerr Neilson's Platinum Asset Management.
Because Ultra Petroleum Corp. (NYSE:UPL) has faced declining sentiment from the smart money, we can see that there lies a certain "tier" of money managers who sold off their entire stakes in Q4. It's worth mentioning that Peter Rathjens, Bruce Clarke and John Campbell's Arrowstreet Capital cut the biggest position of the "upper crust" of funds we key on, totaling about $8.7 million in stock.. Tim Flannery's fund, Copia Capital, also said goodbye to its stock, about $2 million worth. These transactions are interesting, as total hedge fund interest stayed the same (this is a bearish signal in our experience).
Bullish insider trading is most useful when the company in question has seen transactions within the past six months. Over the last six-month time frame, Ultra Petroleum Corp. (NYSE:UPL) has experienced 2 unique insiders buying, and zero insider sales (see the details of insider trades here).
Let's go over hedge fund and insider activity in other stocks similar to Ultra Petroleum Corp. (NYSE:UPL). These stocks are Oasis Petroleum Inc. (NYSE:OAS), Mcmoran Exploration Co (NYSE:MMR), Gulfport Energy Corporation (NASDAQ:GPOR), WPX Energy Inc (NYSE:WPX), and Newfield Exploration Co. (NYSE:NFX). This group of stocks are the members of the independent oil & gas industry and their market caps are similar to UPL's market cap.