InterOil Corporation (USA) (NYSE:IOC) was in 18 hedge funds' portfolio at the end of March. IOC has experienced an increase in hedge fund sentiment of late. There were 17 hedge funds in our database with IOC positions at the end of the previous quarter.
In the eyes of most market participants, hedge funds are viewed as slow, old financial vehicles of the past. While there are more than 8000 funds in operation at present, we at Insider Monkey look at the upper echelon of this group, close to 450 funds. It is widely believed that this group oversees most of the smart money's total capital, and by keeping an eye on their top equity investments, we have formulated a number of investment strategies that have historically outstripped the market. Our small-cap hedge fund strategy outperformed the S&P 500 index by 18 percentage points annually 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 outclassed the S&P 500 index by 23.3 percentage points in 8 months (see the details here).
Equally as integral, positive insider trading sentiment is a second way to break down the stock market universe. Obviously, there are a variety of stimuli for an upper level exec to get rid of shares of his or her company, but only one, very simple reason why they would initiate a purchase. Many empirical studies have demonstrated the market-beating potential of this tactic if investors know where to look (learn more here).
With all of this in mind, we're going to take a gander at the recent action encompassing InterOil Corporation (USA) (NYSE:IOC).
At the end of the first quarter, a total of 18 of the hedge funds we track were long in this stock, a change of 6% from the first quarter. With the smart money's positions undergoing their usual ebb and flow, there exists a select group of noteworthy hedge fund managers who were upping their holdings meaningfully.
Of the funds we track, Paulson & Co, managed by John Paulson, holds the biggest position in InterOil Corporation (USA) (NYSE:IOC). Paulson & Co has a $142.3 million position in the stock, comprising 0.8% of its 13F portfolio. Sitting at the No. 2 spot is Luxor Capital Group, managed by Christian Leone, which held a $29.9 million position; 0.6% of its 13F portfolio is allocated to the stock. Remaining peers that are bullish include Charles Clough's Clough Capital Partners, and Israel Englander's Millennium Management.
As one would reasonably expect, specific money managers were breaking ground themselves. Paulson & Co, managed by John Paulson, assembled the largest position in InterOil Corporation (USA) (NYSE:IOC). Paulson & Co had 142.3 million invested in the company at the end of the quarter. Christian Leone's Luxor Capital Group also made a $29.9 million investment in the stock during the quarter. The other funds with brand new IOC positions are Israel Englander's Millennium Management, John Fichthorn's Dialectic Capital Management, and Daniel S. Och's OZ Management.
Insider buying is most useful when the company in question has experienced transactions within the past 180 days. Over the last half-year time frame, InterOil Corporation (USA) (NYSE:IOC) has seen zero unique insiders buying, and zero insider sales (see the details of insider trades here).
With the results demonstrated by our tactics, everyday investors must always keep an eye on hedge fund and insider trading sentiment, and InterOil Corporation (USA) (NYSE:IOC) shareholders fit into this picture quite nicely.