Is Quicksilver Resources Inc (NYSE:KWK) a buy right now? Hedge funds are turning less bullish. The number of long hedge fund bets shrunk by 3 in recent months.
To most market participants, hedge funds are perceived as worthless, old investment tools of the past. While there are more than 8000 funds with their doors open today, we at Insider Monkey choose to focus on the upper echelon of this club, around 450 funds. It is widely believed that this group has its hands on most of the hedge fund industry’s total asset base, and by watching their top stock picks, we have unearthed a few investment strategies that have historically outpaced the broader indices. Our small-cap hedge fund strategy beat 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 24 percentage points in 7 months (check out a sample of our picks).
Just as key, bullish insider trading activity is another way to parse down the investments you’re interested in. There are a variety of incentives for a corporate insider to cut shares of his or her company, but only one, very clear reason why they would buy. Plenty of empirical studies have demonstrated the valuable potential of this method if you understand what to do (learn more here).
Keeping this in mind, let’s take a gander at the recent action encompassing Quicksilver Resources Inc (NYSE:KWK).
Hedge fund activity in Quicksilver Resources Inc (NYSE:KWK)
In preparation for this year, a total of 10 of the hedge funds we track were bullish in this stock, a change of -23% from one quarter earlier. With hedge funds’ sentiment swirling, there exists a few noteworthy hedge fund managers who were increasing their stakes meaningfully.
When looking at the hedgies we track, SPO Advisory Corp, managed by John H. Scully, holds the biggest position in Quicksilver Resources Inc (NYSE:KWK). SPO Advisory Corp has a $71 million position in the stock, comprising 1.1% of its 13F portfolio. Coming in second is Southeastern Asset Management, managed by Mason Hawkins, which held a $71 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, Jim Simons’s Renaissance Technologies and David Costen Haley’s HBK Investments.
Due to the fact that Quicksilver Resources Inc (NYSE:KWK) has witnessed declining sentiment from the smart money, we can see that there was a specific group of funds who sold off their positions entirely heading into 2013. Interestingly, Israel Englander’s Millennium Management dropped the biggest stake of the “upper crust” of funds we watch, comprising an estimated $5 million in stock.. T Boone Pickens’s fund, BP Capital, also dumped its stock, about $5 million worth. These transactions are important to note, as aggregate hedge fund interest was cut by 3 funds heading into 2013.
How have insiders been trading Quicksilver Resources Inc (NYSE:KWK)?
Insider purchases made by high-level executives is most useful when the company we’re looking at has experienced transactions within the past half-year. Over the last six-month time frame, Quicksilver Resources Inc (NYSE:KWK) has experienced zero unique insiders purchasing, and zero insider sales (see the details of insider trades here).
Let’s go over hedge fund and insider activity in other stocks similar to Quicksilver Resources Inc (NYSE:KWK). These stocks are LRR Energy LP (NYSE:LRE), VAALCO Energy, Inc. (NYSE:EGY), Apco Oil and Gas International Inc (NASDAQ:APAGF), Sandridge Mississippian Trust I (NYSE:SDT), and Triangle Petroleum Corporation (NYSEAMEX:TPLM). This group of stocks are in the independent oil & gas industry and their market caps are similar to KWK’s market cap.
|Company Name||# of Hedge Funds||# of Insiders Buying||# of Insiders Selling|
|LRR Energy LP (NYSE:LRE)||1||1||5|
|VAALCO Energy, Inc. (NYSE:EGY)||10||0||0|
|Apco Oil and Gas International Inc (NASDAQ:APAGF)||4||0||1|
|Sandridge Mississippian Trust I (NYSE:SDT)||3||0||1|
|Triangle Petroleum Corporation (NYSEAMEX:TPLM)||8||1||3|
With the results exhibited by our tactics, everyday investors must always keep an eye on hedge fund and insider trading sentiment, and Quicksilver Resources Inc (NYSE:KWK) is no exception.