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Is BP plc (ADR) (BP) Going to Burn These Hedge Funds?

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BP plc (ADR) (NYSE:BP) was in 44 hedge funds’ portfolio at the end of March. BP investors should be aware of a decrease in hedge fund interest of late. There were 45 hedge funds in our database with BP holdings at the end of the previous quarter.

BP plc (ADR) (NYSE:BP)

In the eyes of most market participants, hedge funds are seen as unimportant, old investment tools of yesteryear. While there are over 8000 funds trading today, we look at the crème de la crème of this club, around 450 funds. It is widely believed that this group oversees most of the hedge fund industry’s total capital, and by monitoring their highest performing picks, we have unsheathed a number of investment strategies that have historically beaten the market. Our small-cap hedge fund strategy outperformed the S&P 500 index by 18 percentage points per annum 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 23.3 percentage points in 8 months (explore the details and some picks here).

Equally as important, optimistic insider trading sentiment is another way to break down the marketplace. There are plenty of stimuli for an upper level exec to sell shares of his or her company, but just one, very simple reason why they would initiate a purchase. Plenty of academic studies have demonstrated the market-beating potential of this method if you know where to look (learn more here).

With these “truths” under our belt, it’s important to take a glance at the latest action regarding BP plc (ADR) (NYSE:BP).

Hedge fund activity in BP plc (ADR) (NYSE:BP)

Heading into Q2, a total of 44 of the hedge funds we track were long in this stock, a change of -2% from the previous quarter. With hedge funds’ capital changing hands, there exists a select group of noteworthy hedge fund managers who were boosting their holdings meaningfully.

When looking at the hedgies we track, Seth Klarman’s Baupost Group had the largest position in BP plc (ADR) (NYSE:BP), worth close to $725.3 million, comprising 23.3% of its total 13F portfolio. The second largest stake is held by Frank Brosens of Taconic Capital, with a $508.2 million position; 19.2% of its 13F portfolio is allocated to the company. Some other hedge funds that hold long positions include Richard S. Pzena’s Pzena Investment Management, and Michael Larson’s Bill & Melinda Gates Foundation Trust.

Judging by the fact that BP plc (ADR) (NYSE:BP) has experienced declining sentiment from hedge fund managers, it’s easy to see that there is a sect of hedgies that elected to cut their entire stakes in Q1. Intriguingly, Kenneth Mario Garschina’s Mason Capital Management said goodbye to the biggest investment of the 450+ funds we track, worth close to $142.3 million in stock., and Richard Perry of Perry Capital was right behind this move, as the fund said goodbye to about $95.1 million worth. These transactions are important to note, as total hedge fund interest fell by 1 funds in Q1.

How have insiders been trading BP plc (ADR) (NYSE:BP)?

Insider purchases made by high-level executives is best served when the primary stock in question has seen transactions within the past 180 days. Over the last six-month time period, BP plc (ADR) (NYSE:BP) has seen zero unique insiders purchasing, and zero insider sales (see the details of insider trades here).

Let’s also review hedge fund and insider activity in other stocks similar to BP plc (ADR) (NYSE:BP). These stocks are Eni SpA (ADR) (NYSE:E), China Petroleum & Chemical Corp (ADR) (NYSE:SNP), Ecopetrol S.A. (ADR) (NYSE:EC), and TOTAL S.A. (ADR) (NYSE:TOT). This group of stocks are the members of the major integrated oil & gas industry and their market caps are closest to BP’s market cap.

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