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Noble Corporation (NYSE:NE): Hedge Funds Are Bullish and Insiders Are Bearish, What Should You Do?

Noble Corporation (NYSE:NE) was in 31 hedge funds’ portfolio at the end of December. NE investors should pay attention to an increase in hedge fund interest in recent months. There were 30 hedge funds in our database with NE positions at the end of the previous quarter.

To most investors, hedge funds are viewed as worthless, outdated investment tools of years past. While there are greater than 8000 funds in operation at present, we at Insider Monkey look at the moguls of this group, about 450 funds. Most estimates calculate that this group oversees the lion’s share of all hedge funds’ total capital, and by watching their highest performing picks, we have figured out a few investment strategies that have historically outpaced the broader indices. Our small-cap hedge fund strategy outpaced 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 trumped the S&P 500 index by 25 percentage points in 6.5 month (see the details here).

Noble Corporation (NYSE:NE)Just as key, bullish insider trading activity is another way to parse down the stock market universe. As the old adage goes: there are lots of incentives for a corporate insider to get rid of shares of his or her company, but just one, very obvious reason why they would buy. Several empirical studies have demonstrated the useful potential of this tactic if you know what to do (learn more here).

Consequently, it’s important to take a look at the recent action surrounding Noble Corporation (NYSE:NE).

What have hedge funds been doing with Noble Corporation (NYSE:NE)?

At the end of the fourth quarter, a total of 31 of the hedge funds we track held long positions in this stock, a change of 3% from the previous quarter. With the smart money’s capital changing hands, there exists a select group of noteworthy hedge fund managers who were increasing their stakes significantly.

According to our comprehensive database, Adage Capital Management, managed by Phill Gross and Robert Atchinson, holds the largest position in Noble Corporation (NYSE:NE). Adage Capital Management has a $170 million position in the stock, comprising 0.6% of its 13F portfolio. Sitting at the No. 2 spot is Valinor Management LLC, managed by David Gallo, which held a $137 million position; 1% of its 13F portfolio is allocated to the company. Other peers that hold long positions include Sean Cullinan’s Point State Capital, Ryan Heslop and Ariel Warszawski’s Firefly Value Partners and Jim Simons’s Renaissance Technologies.

Now, specific money managers were breaking ground themselves. Appaloosa Management LP, managed by David Tepper, created the largest position in Noble Corporation (NYSE:NE). Appaloosa Management LP had 47 million invested in the company at the end of the quarter. Alec Litowitz and Ross Laser’s Magnetar Capital also made a $29 million investment in the stock during the quarter. The other funds with new positions in the stock are Douglas Hirsch’s Seneca Capital, Clint Carlson’s Carlson Capital, and Louis Bacon’s Moore Global Investments.

What do corporate executives and insiders think about Noble Corporation (NYSE:NE)?

Bullish insider trading is best served when the company we’re looking at has experienced transactions within the past half-year. Over the last 180-day time period, Noble Corporation (NYSE:NE) has seen zero unique insiders buying, and zero insider sales (see the details of insider trades here).

With the returns shown by the aforementioned research, everyday investors must always watch hedge fund and insider trading activity, and Noble Corporation (NYSE:NE) shareholders fit into this picture quite nicely.

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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