Should You Avoid Callon Petroleum Company (CPE)?

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Callon Petroleum Company (NYSE:CPE) was in 6 hedge funds' portfolio at the end of December. CPE investors should pay attention to a decrease in support from the world's most elite money managers recently. There were 7 hedge funds in our database with CPE holdings at the end of the previous quarter.

At the moment, there are many metrics investors can use to track the equity markets. A couple of the best are hedge fund and insider trading movement. At Insider Monkey, our research analyses have shown that, historically, those who follow the best picks of the elite investment managers can outperform the S&P 500 by a significant margin (see just how much).

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Just as integral, positive insider trading sentiment is a second way to break down the stock market universe. Just as you'd expect, there are a number of incentives for an upper level exec to downsize shares of his or her company, but just one, very clear reason why they would behave bullishly. Several academic studies have demonstrated the useful potential of this method if investors understand where to look (learn more here).

With all of this in mind, let's take a look at the latest action surrounding Callon Petroleum Company (NYSE:CPE).

What have hedge funds been doing with Callon Petroleum Company (NYSE:CPE)?

In preparation for this year, a total of 6 of the hedge funds we track were long in this stock, a change of -14% from the third quarter. With hedge funds' positions undergoing their usual ebb and flow, there exists a few notable hedge fund managers who were upping their stakes considerably.

According to our comprehensive database, Renaissance Technologies, managed by Jim Simons, holds the biggest position in Callon Petroleum Company (NYSE:CPE). Renaissance Technologies has a $2.3 million position in the stock, comprising less than 0.1%% of its 13F portfolio. On Renaissance Technologies's heels is Cliff Asness of AQR Capital Management, with a $0.6 million position; less than 0.1%% of its 13F portfolio is allocated to the company. Remaining hedgies with similar optimism include Ken Griffin's Citadel Investment Group, D. E. Shaw's D E Shaw and Russell Lucas's Lucas Capital Management.

Seeing as Callon Petroleum Company (NYSE:CPE) has faced bearish sentiment from the smart money, logic holds that there exists a select few hedgies that elected to cut their entire stakes in Q4. Interestingly, Nelson Obus's Wynnefield Capital dumped the largest stake of the "upper crust" of funds we key on, totaling an estimated $2.4 million in stock.. Israel Englander's fund, Millennium Management, also sold off its stock, about $0.1 million worth. These moves are intriguing to say the least, as total hedge fund interest was cut by 1 funds in Q4.

How are insiders trading Callon Petroleum Company (NYSE:CPE)?

Insider purchases made by high-level executives is particularly usable when the company we're looking at has seen transactions within the past 180 days. Over the latest six-month time period, Callon Petroleum Company (NYSE:CPE) has experienced 2 unique insiders buying, and 1 insider sales (see the details of insider trades here).

Let's also take a look at hedge fund and insider activity in other stocks similar to Callon Petroleum Company (NYSE:CPE). These stocks are Crimson Exploration Inc. (NASDAQ:CXPO), Miller Energy Resources Inc (NYSE:MILL), Equal Energy Ltd. (USA) (NYSE:EQU), Harvest Natural Resources, Inc. (NYSE:HNR), and Endeavour International Corporation (NYSE:END). This group of stocks belong to the independent oil & gas industry and their market caps are similar to CPE's market cap.

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