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Is Bill Barrett Corporation (BBG) Going to Burn These Hedge Funds?

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Is it smart to be bullish on Bill Barrett Corporation (NYSE:BBG)?

If you were to ask many investors, hedge funds are assumed to be overrated, old financial vehicles of an era lost to time. Although there are over 8,000 hedge funds in operation today, this site looks at the masters of this group, close to 525 funds. Analysts calculate that this group oversees the majority of the hedge fund industry’s total capital, and by tracking their best investments, we’ve unsheathed a few investment strategies that have historically outpaced Mr. Market. Our small-cap hedge fund strategy beat the S&P 500 index by 18 percentage points a year 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 outpaced the S&P 500 index by 33 percentage points in 11 months (find the details here).

Just as key, bullish insider trading sentiment is another way to analyze the stock market universe. Obviously, there are a variety of reasons for an upper level exec to cut shares of his or her company, but only one, very clear reason why they would behave bullishly. Several empirical studies have demonstrated the useful potential of this strategy if piggybackers understand where to look (learn more here).

Thus, let’s study the newest info for Bill Barrett Corporation (NYSE:BBG).

Bill Barrett Corporation (NYSE:BBG)

Hedge fund activity in Bill Barrett Corporation (NYSE:BBG)

In preparation for the third quarter, a total of 14 of the hedge funds we track held long positions in this stock, a change of 40% from the previous quarter. With hedge funds’ sentiment swirling, there exists an “upper tier” of key hedge fund managers who were upping their holdings substantially.

Out of the hedge funds we follow, Mark Travis’s Intrepid Capital Management had the largest position in Bill Barrett Corporation (NYSE:BBG), worth close to $31.9 million, comprising 5.6% of its total 13F portfolio. Sitting at the No. 2 spot is SAC Capital Advisors, managed by Steven Cohen, which held a $11.4 million position; 0.1% of its 13F portfolio is allocated to the company. Other hedge funds with similar optimism include Israel Englander’s Millennium Management, and Gregory Fraser, Rudolph Kluiber, and Timothy Krochuk’s GRT Capital Partners.

Consequently, certain bigger names were breaking ground themselves. Intrepid Capital Management, managed by Mark Travis, established the biggest position in Bill Barrett Corporation (NYSE:BBG). Intrepid Capital Management had 31.9 million invested in the company at the end of the quarter. Steven Cohen’s SAC Capital Advisors also made a $11.4 million investment in the stock during the quarter. The other funds with new positions in the stock are Israel Englander’s Millennium Management, Sean Cullinan’s Point State Capital, and John Osterweis’s Osterweis Capital Management.

Insider trading activity in Bill Barrett Corporation (NYSE:BBG)

Legal insider trading, particularly when it’s bullish, is most useful when the company we’re looking at has experienced transactions within the past six months. Over the latest 180-day time frame, Bill Barrett Corporation (NYSE:BBG) has experienced zero unique insiders purchasing, and zero insider sales (see the details of insider trades here).

We’ll go over the relationship between both of these indicators in other stocks similar to Bill Barrett Corporation (NYSE:BBG). These stocks are Crestwood Midstream Partners LP (NYSE:CMLP), Rex Energy Corporation (NASDAQ:REXX), W&T Offshore, Inc. (NYSE:WTI), Northern Oil & Gas, Inc. (NYSEAMEX:NOG), and Approach Resources Inc. (NASDAQ:AREX). All of these stocks are in the oil & gas drilling & exploration industry and their market caps are closest to BBG’s market cap.

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