Key Energy Services, Inc. (NYSE:KEG): Hedge Funds Are Bearish and Insiders Are Bullish, What Should You Do?

Is Key Energy Services, Inc. (NYSE:KEG) going to take off soon? Prominent investors are getting less optimistic. The number of bullish hedge fund bets shrunk by 3 lately.

William Harnisch

In the financial world, there are many metrics shareholders can use to track publicly traded companies. Some of the most underrated are hedge fund and insider trading sentiment. At Insider Monkey, our research analyses have shown that, historically, those who follow the best picks of the elite money managers can beat their index-focused peers by a very impressive amount (see just how much).

Equally as beneficial, positive insider trading activity is a second way to parse down the financial markets. There are a variety of incentives for an upper level exec to drop shares of his or her company, but just one, very simple reason why they would initiate a purchase. Various empirical studies have demonstrated the valuable potential of this method if shareholders understand what to do (learn more here).

With all of this in mind, it’s important to take a peek at the recent action surrounding Key Energy Services, Inc. (NYSE:KEG).

How have hedgies been trading Key Energy Services, Inc. (NYSE:KEG)?

At year’s end, a total of 18 of the hedge funds we track held long positions in this stock, a change of -14% from the previous quarter. With hedgies’ capital changing hands, there exists a select group of noteworthy hedge fund managers who were increasing their stakes meaningfully.

Of the funds we track, Peconic Partners LLC, managed by William Harnisch, holds the most valuable position in Key Energy Services, Inc. (NYSE:KEG). Peconic Partners LLC has a $21 million position in the stock, comprising 4.1% of its 13F portfolio. Sitting at the No. 2 spot is Ken Griffin of Citadel Investment Group, with a $17 million position; the fund has 0% of its 13F portfolio invested in the stock. Other peers that hold long positions include Dmitry Balyasny’s Balyasny Asset Management, David Costen Haley’s HBK Investments and Cliff Asness’s AQR Capital Management.

Seeing as Key Energy Services, Inc. (NYSE:KEG) has witnessed a declination in interest from the aggregate hedge fund industry, it’s easy to see that there were a few hedgies that slashed their full holdings at the end of the year. Intriguingly, Mark Rachesky’s MHR Fund Management said goodbye to the largest investment of the “upper crust” of funds we track, totaling close to $122 million in stock., and Clint Carlson of Carlson Capital was right behind this move, as the fund cut about $17 million worth. These moves are interesting, as total hedge fund interest dropped by 3 funds at the end of the year.

What have insiders been doing with Key Energy Services, Inc. (NYSE:KEG)?

Insider trading activity, especially when it’s bullish, is most useful when the primary stock in question has seen transactions within the past 180 days. Over the latest 180-day time period, Key Energy Services, Inc. (NYSE:KEG) has seen 4 unique insiders buying, and 1 insider sales (see the details of insider trades here).

With the results exhibited by the aforementioned time-tested strategies, retail investors must always watch hedge fund and insider trading sentiment, and Key Energy Services, Inc. (NYSE:KEG) is an important part of this process.

Click here to learn more about Insider Monkey’s Hedge Fund Newsletter

Insider Monkey’s small-cap strategy returned 29.2% between September 2012 and February 2013 versus 8.7% for the S&P 500 index. Try it now by clicking the link above.

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