Kinder Morgan Management, LLC (NYSE:KMR) was in 10 hedge funds' portfolio at the end of March. KMR investors should pay attention to an increase in support from the world's most elite money managers recently. There were 8 hedge funds in our database with KMR positions at the end of the previous quarter.
If you'd ask most traders, hedge funds are assumed to be unimportant, outdated investment tools of yesteryear. While there are more than 8000 funds with their doors open at the moment, we look at the masters of this group, around 450 funds. Most estimates calculate that this group oversees the lion's share of the smart money's total capital, and by paying attention to their top picks, we have unearthed a number of investment strategies that have historically outstripped Mr. Market. Our small-cap hedge fund strategy outpaced the S&P 500 index by 18 percentage points per 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 outperformed the S&P 500 index by 23.3 percentage points in 8 months (see the details here).
Just as important, optimistic insider trading activity is another way to parse down the investments you're interested in. Obviously, there are many motivations for an insider to drop shares of his or her company, but just one, very obvious reason why they would behave bullishly. Various empirical studies have demonstrated the useful potential of this method if investors know what to do (learn more here).
Keeping this in mind, it's important to take a peek at the recent action regarding Kinder Morgan Management, LLC (NYSE:KMR).
At the end of the first quarter, a total of 10 of the hedge funds we track held long positions in this stock, a change of 25% from the previous quarter. With hedge funds' positions undergoing their usual ebb and flow, there exists a few notable hedge fund managers who were upping their stakes substantially.
Of the funds we track, D E Shaw, managed by D. E. Shaw, holds the most valuable position in Kinder Morgan Management, LLC (NYSE:KMR). D E Shaw has a $22.6 million position in the stock, comprising 0.1% of its 13F portfolio. On D E Shaw's heels is Citadel Investment Group, managed by Ken Griffin, which held a $15.6 million position; the fund has less than 0.1%% of its 13F portfolio invested in the stock. Remaining peers with similar optimism include Jim Simons's Renaissance Technologies, Richard Driehaus's Driehaus Capital and Ben Levine, Andrew Manuel and Stefan Renold's LMR Partners.
As aggregate interest increased, some big names have been driving this bullishness. Renaissance Technologies, managed by Jim Simons, assembled the most outsized position in Kinder Morgan Management, LLC (NYSE:KMR). Renaissance Technologies had 7 million invested in the company at the end of the quarter. Ben Levine, Andrew Manuel and Stefan Renold's LMR Partners also made a $4 million investment in the stock during the quarter. The following funds were also among the new KMR investors: Israel Englander's Millennium Management and Matthew Hulsizer's PEAK6 Capital Management.
Bullish insider trading is most useful when the primary stock in question has seen transactions within the past six months. Over the last six-month time period, Kinder Morgan Management, LLC (NYSE:KMR) has seen zero 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 Kinder Morgan Management, LLC (NYSE:KMR). These stocks are Oneok Partners LP (NYSE:OKS), Magellan Midstream Partners, L.P. (NYSE:MMP), Enbridge Energy Partners, L.P. (NYSE:EEP), Pembina Pipeline Corp (NYSE:PBA), and El Paso Pipeline Partners, L.P. (NYSE:EPB). This group of stocks are in the oil & gas pipelines industry and their market caps resemble KMR's market cap.