Is LinnCo LLC (NASDAQ:LNCO) an attractive investment today? The smart money is taking a pessimistic view. The number of long hedge fund bets retreated by 4 recently.
If you’d ask most market participants, hedge funds are viewed as unimportant, old investment vehicles of yesteryear. While there are greater than 8000 funds trading today, we at Insider Monkey hone in on the upper echelon of this group, around 450 funds. Most estimates calculate that this group controls most of all hedge funds’ total capital, and by keeping an eye on their best picks, we have brought to light a few investment strategies that have historically outstripped Mr. Market. Our small-cap hedge fund strategy outstripped 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 topped the S&P 500 index by 23.3 percentage points in 8 months (explore the details and some picks here).
Equally as beneficial, positive insider trading activity is another way to parse down the marketplace. There are plenty of motivations for a corporate insider to drop shares of his or her company, but only one, very simple reason why they would initiate a purchase. Plenty of empirical studies have demonstrated the impressive potential of this strategy if shareholders know what to do (learn more here).
With these “truths” under our belt, it’s important to take a peek at the recent action regarding LinnCo LLC (NASDAQ:LNCO).
What have hedge funds been doing with LinnCo LLC (NASDAQ:LNCO)?
In preparation for this quarter, a total of 10 of the hedge funds we track held long positions in this stock, a change of -29% from one quarter earlier. With hedgies’ capital changing hands, there exists a few key hedge fund managers who were boosting their stakes substantially.
Of the funds we track, Moore Global Investments, managed by Louis Bacon, holds the largest position in LinnCo LLC (NASDAQ:LNCO). Moore Global Investments has a $66.2 million position in the stock, comprising 1.1% of its 13F portfolio. On Moore Global Investments’s heels is Martin D. Sass of MD Sass, with a $42.8 million position; the fund has 3.1% of its 13F portfolio invested in the stock. Some other hedgies that hold long positions include Jeffrey Tannenbaum’s Fir Tree, Leon Cooperman’s Omega Advisors and Robert Pitts’s Steadfast Capital Management.
Seeing as LinnCo LLC (NASDAQ:LNCO) has faced falling interest from the aggregate hedge fund industry, logic holds that there exists a select few hedge funds who were dropping their entire stakes in Q1. At the top of the heap, Jeffrey Tannenbaum’s Fir Tree dropped the largest stake of the “upper crust” of funds we key on, comprising close to $58.5 million in stock., and Philip Hempleman of Ardsley Partners was right behind this move, as the fund dropped about $28 million worth. These moves are intriguing to say the least, as aggregate hedge fund interest was cut by 4 funds in Q1.
How are insiders trading LinnCo LLC (NASDAQ:LNCO)?
Insider trading activity, especially when it’s bullish, is particularly usable when the company in focus has seen transactions within the past six months. Over the latest 180-day time frame, LinnCo LLC (NASDAQ:LNCO) has seen zero unique insiders purchasing, and zero insider sales (see the details of insider trades here).
Let’s also examine hedge fund and insider activity in other stocks similar to LinnCo LLC (NASDAQ:LNCO). These stocks are Gran Tierra Energy Inc. (NYSEAMEX:GTE), EXCO Resources Inc (NYSE:XCO), Bonanza Creek Energy Inc (NYSE:BCEI), PDC Energy Inc (NASDAQ:PDCE), and Crosstex Energy, L.P. (NASDAQ:XTEX). This group of stocks are in the independent oil & gas industry and their market caps are closest to LNCO’s market cap.