This Metric Says You Are Smart to Buy Atlas Energy LP (ATLS)

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Atlas Energy LP (NYSE:ATLS) has seen an increase in hedge fund interest recently.

In the eyes of most investors, hedge funds are seen as underperforming, old investment tools of the past. While there are over 8000 funds with their doors open today, we at Insider Monkey look at the elite of this club, close to 450 funds. It is widely believed that this group oversees the lion’s share of the hedge fund industry’s total asset base, and by monitoring their best picks, we have uncovered a few investment strategies that have historically outperformed the S&P 500 index. Our small-cap hedge fund strategy beat the S&P 500 index by 18 percentage points per annum 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 outpaced the S&P 500 index by 23.3 percentage points in 8 months (see the details here).

Equally as important, optimistic insider trading activity is a second way to parse down the world of equities. Obviously, there are plenty of motivations for an executive to downsize shares of his or her company, but just one, very obvious reason why they would behave bullishly. Plenty of academic studies have demonstrated the market-beating potential of this strategy if piggybackers know what to do (learn more here).

With these “truths” under our belt, it’s important to take a peek at the recent action surrounding Atlas Energy LP (NYSE:ATLS).

How are hedge funds trading Atlas Energy LP (NYSE:ATLS)?

At Q1′s end, a total of 15 of the hedge funds we track were bullish in this stock, a change of 7% from one quarter earlier. With hedgies’ sentiment swirling, there exists a select group of notable hedge fund managers who were increasing their holdings considerably.

Atlas Energy LP (NYSE:ATLS)Of the funds we track, Omega Advisors, managed by Leon Cooperman, holds the biggest position in Atlas Energy LP (NYSE:ATLS). Omega Advisors has a $171.5 million position in the stock, comprising 2.7% of its 13F portfolio. The second largest stake is held by Brian Jackelow of SAB Capital Management, with a $44.5 million position; 3.5% of its 13F portfolio is allocated to the company. Other hedgies that are bullish include Remy Trafelet’s Trafelet Capital, Wayne Cooperman’s Cobalt Capital Management and Dmitry Balyasny’s Balyasny Asset Management.

As one would reasonably expect, some big names have jumped into Atlas Energy LP (NYSE:ATLS) headfirst. SAB Capital Management, managed by Brian Jackelow, created the most outsized position in Atlas Energy LP (NYSE:ATLS). SAB Capital Management had 44.5 million invested in the company at the end of the quarter. Richard Driehaus’s Driehaus Capital also initiated a $10.9 million position during the quarter. The only other fund with a brand new ATLS position is Scott Scher & Michael Prober’s Clovis Capital Management.

How are insiders trading Atlas Energy LP (NYSE:ATLS)?

Insider buying is at its handiest when the primary stock in question has experienced transactions within the past six months. Over the latest six-month time frame, Atlas Energy LP (NYSE:ATLS) has experienced 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 Atlas Energy LP (NYSE:ATLS). These stocks are Inergy, L.P. (NYSE:NRGY), Suburban Propane Partners LP (NYSE:SPH), Piedmont Natural Gas Company, Inc. (NYSE:PNY), Southwest Gas Corporation (NYSE:SWX), and WGL Holdings Inc (NYSE:WGL). All of these stocks are in the gas utilities industry and their market caps are closest to ATLS’s market cap.

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