Valero Energy Corporation (NYSE:VLO) shareholders have witnessed a decrease in activity from the world's largest hedge funds lately.
In the financial world, there are tons of methods market participants can use to analyze Mr. Market. A duo of the most useful are hedge fund and insider trading activity. At Insider Monkey, our research analyses have shown that, historically, those who follow the best picks of the elite hedge fund managers can outclass the broader indices by a solid amount (see just how much).
Equally as beneficial, optimistic insider trading sentiment is a second way to parse down the financial markets. As the old adage goes: there are plenty of reasons for a corporate insider to drop shares of his or her company, but only one, very clear reason why they would behave bullishly. Various academic studies have demonstrated the impressive potential of this strategy if shareholders understand what to do (learn more here).
With these "truths" under our belt, let's take a gander at the latest action surrounding Valero Energy Corporation (NYSE:VLO).
In preparation for this year, a total of 47 of the hedge funds we track were bullish in this stock, a change of 0% from the third quarter. With hedgies' sentiment swirling, there exists a select group of noteworthy hedge fund managers who were boosting their stakes meaningfully.
When looking at the hedgies we track, Peter Rathjens, Bruce Clarke and John Campbell's Arrowstreet Capital had the most valuable position in Valero Energy Corporation (NYSE:VLO), worth close to $231 million billion, accounting for 1.2% of its total 13F portfolio. On Arrowstreet Capital's heels is East Side Capital (RR Partners), managed by Steven Richman, which held a $169 million position; 2% of its 13F portfolio is allocated to the stock. Some other hedge funds with similar optimism include Clint Carlson's Carlson Capital, Cliff Asness's AQR Capital Management and Frank Brosens's Taconic Capital.
Due to the fact that Valero Energy Corporation (NYSE:VLO) has faced falling interest from the smart money, logic holds that there exists a select few hedgies that elected to cut their entire stakes last quarter. Interestingly, Stanley Druckenmiller's Duquesne Capital sold off the biggest stake of the "upper crust" of funds we track, valued at an estimated $27 million in stock., and Sean Cullinan of Point State Capital was right behind this move, as the fund dumped about $13 million worth. These moves are interesting, as aggregate hedge fund interest stayed the same (this is a bearish signal in our experience).
Insider trading activity, especially when it's bullish, is best served when the primary stock in question has seen transactions within the past half-year. Over the last half-year time period, Valero Energy Corporation (NYSE:VLO) has experienced zero unique insiders buying, and 9 insider sales (see the details of insider trades here).
With the results shown by the aforementioned time-tested strategies, retail investors must always pay attention to hedge fund and insider trading sentiment, and Valero Energy Corporation (NYSE:VLO) is an important part of this process.
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