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Newfield Exploration Co. (NYSE:NFX): Are Hedge Funds Right About This Stock?

Is Newfield Exploration Co. (NYSE:NFX) an attractive investment now? Hedge funds are taking a pessimistic view. The number of long hedge fund positions were trimmed by 1 in recent months.

To most market participants, hedge funds are seen as worthless, old financial vehicles of yesteryear. While there are over 8000 funds in operation at the moment, we hone in on the crème de la crème of this club, around 450 funds. Most estimates calculate that this group has its hands on the majority of the hedge fund industry’s total capital, and by monitoring their highest performing stock picks, we have brought to light a few investment strategies that have historically outperformed the market. Our small-cap hedge fund strategy outperformed the S&P 500 index by 18 percentage points annually 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 outperformed the S&P 500 index by 25 percentage points in 6.5 month (see the details here).

Dmitry BalyasnyJust as beneficial, bullish insider trading activity is another way to parse down the marketplace. There are lots of stimuli for an executive to sell shares of his or her company, but just one, very clear reason why they would buy. Several empirical studies have demonstrated the impressive potential of this tactic if investors know where to look (learn more here).

Now, we’re going to take a glance at the key action surrounding Newfield Exploration Co. (NYSE:NFX).

How have hedgies been trading Newfield Exploration Co. (NYSE:NFX)?

In preparation for this year, a total of 22 of the hedge funds we track were long in this stock, a change of -4% from one quarter earlier. With hedge funds’ sentiment swirling, there exists a few key hedge fund managers who were boosting their stakes meaningfully.

Of the funds we track, Balyasny Asset Management, managed by Dmitry Balyasny, holds the largest position in Newfield Exploration Co. (NYSE:NFX). Balyasny Asset Management has a $77 million position in the stock, comprising 2.1% of its 13F portfolio. The second largest stake is held by Arrowstreet Capital, managed by Peter Rathjens, Bruce Clarke and John Campbell, which held a $65 million position; the fund has 0.3% of its 13F portfolio invested in the stock. Some other hedge funds that hold long positions include D. E. Shaw’s D E Shaw, Ken Griffin’s Citadel Investment Group and Bruce Kovner’s Caxton Associates LP.

Since Newfield Exploration Co. (NYSE:NFX) has faced falling interest from the aggregate hedge fund industry, we can see that there is a sect of hedge funds that elected to cut their positions entirely in Q4. Interestingly, Robert Rodriguez and Steven Romick’s First Pacific Advisors LLC dumped the largest investment of all the hedgies we watch, comprising about $72 million in stock.. Robert Bishop’s fund, Impala Asset Management, also cut its stock, about $25 million worth. These transactions are intriguing to say the least, as aggregate hedge fund interest was cut by 1 funds in Q4.

How are insiders trading Newfield Exploration Co. (NYSE:NFX)?

Insider buying is best served when the company in question has seen transactions within the past six months. Over the latest six-month time period, Newfield Exploration Co. (NYSE:NFX) has experienced zero unique insiders purchasing, and 4 insider sales (see the details of insider trades here).

With the returns exhibited by the aforementioned tactics, everyday investors must always pay attention to hedge fund and insider trading activity, and Newfield Exploration Co. (NYSE:NFX) is no exception.

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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