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Phillips 66 (PSX): Insiders Aren’t Crazy About It

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Is Phillips 66 (NYSE:PSX) a buy, sell, or hold? The best stock pickers are getting more optimistic. The number of long hedge fund positions rose by 3 recently.

Phillips 66 (NYSE:PSX)

If you’d ask most stock holders, hedge funds are perceived as underperforming, outdated investment vehicles of the past. While there are greater than 8000 funds trading at present, we at Insider Monkey look at the crème de la crème of this group, close to 450 funds. It is estimated that this group has its hands on the majority of all hedge funds’ total asset base, and by tracking their best investments, we have come up with a number of investment strategies that have historically outpaced the S&P 500 index. Our small-cap hedge fund strategy outpaced the S&P 500 index by 18 percentage points annually 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 beaten the S&P 500 index by 23.3 percentage points in 8 months (see all of our picks from August).

Just as integral, bullish insider trading sentiment is a second way to parse down the investments you’re interested in. Obviously, there are lots of motivations for an upper level exec to sell shares of his or her company, but just one, very obvious reason why they would buy. Many empirical studies have demonstrated the market-beating potential of this method if shareholders know what to do (learn more here).

With these “truths” under our belt, we’re going to take a glance at the latest action encompassing Phillips 66 (NYSE:PSX).

What does the smart money think about Phillips 66 (NYSE:PSX)?

Heading into Q2, a total of 48 of the hedge funds we track were long in this stock, a change of 7% from the previous quarter. With hedgies’ capital changing hands, there exists a few notable hedge fund managers who were upping their stakes meaningfully.

Of the funds we track, Warren Buffett’s Berkshire Hathaway had the biggest position in Phillips 66 (NYSE:PSX), worth close to $1.9007 billion, comprising 2.2% of its total 13F portfolio. Sitting at the No. 2 spot is East Side Capital (RR Partners), managed by Steven Richman, which held a $245.3 million position; the fund has 12.3% of its 13F portfolio invested in the stock. Other hedge funds with similar optimism include Phill Gross and Robert Atchinson’s Adage Capital Management, Bill Miller’s Legg Mason Capital Management and D. E. Shaw’s D E Shaw.

As industrywide interest jumped, key hedge funds were breaking ground themselves. OZ Management, managed by Daniel S. Och, initiated the largest position in Phillips 66 (NYSE:PSX). OZ Management had 91.1 million invested in the company at the end of the quarter. Doug Silverman and Alexander Klabin’s Senator Investment Group also initiated a $84 million position during the quarter. The following funds were also among the new PSX investors: Tom Sandell’s Sandell Asset Management, Larry Robbins’s Glenview Capital, and T Boone Pickens’s BP Capital.

How are insiders trading Phillips 66 (NYSE:PSX)?

Bullish insider trading is best served when the company in question has seen transactions within the past half-year. Over the latest six-month time period, Phillips 66 (NYSE:PSX) has seen zero unique insiders purchasing, and 1 insider sales (see the details of insider trades here).

Let’s also review hedge fund and insider activity in other stocks similar to Phillips 66 (NYSE:PSX). These stocks are Marathon Oil Corporation (NYSE:MRO), Hess Corp. (NYSE:HES), Valero Energy Corporation (NYSE:VLO), Marathon Petroleum Corp (NYSE:MPC), and Imperial Oil Limited (USA) (NYSEAMEX:IMO). This group of stocks are the members of the oil & gas refining & marketing industry and their market caps are similar to PSX’s market cap.

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