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This Metric Says You Are Smart to Sell W&T Offshore, Inc. (WTI): Hercules Offshore, Inc. (HERO), Bill Barrett Corporation (BBG)

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Is W&T Offshore, Inc. (NYSE:WTI) going to take off soon? Hedge funds are taking a bearish view. The number of long hedge fund positions were trimmed by 3 lately.

In the eyes of most investors, hedge funds are viewed as worthless, outdated investment tools of the past. While there are greater than 8000 funds with their doors open at the moment, we hone in on the moguls of this club, close to 450 funds. Most estimates calculate that this group oversees the lion’s share of the smart money’s total capital, and by paying attention to their highest performing investments, we have unearthed a few investment strategies that have historically beaten the market. 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 began to sharing our picks with our subscribers at the end of August 2012, we have outclassed the S&P 500 index by 24 percentage points in 7 months (check out a sample of our picks).

W&T Offshore, Inc.

Equally as key, bullish insider trading activity is a second way to break down the stock market universe. Obviously, there are many stimuli for a corporate insider to drop shares of his or her company, but just one, very simple reason why they would buy. Plenty of empirical studies have demonstrated the valuable potential of this tactic if you understand where to look (learn more here).

Now, let’s take a glance at the latest action encompassing W&T Offshore, Inc. (NYSE:WTI).

What have hedge funds been doing with W&T Offshore, Inc. (NYSE:WTI)?

In preparation for this year, a total of 10 of the hedge funds we track held long positions in this stock, a change of -23% from one quarter earlier. With hedge funds’ capital changing hands, there exists an “upper tier” of notable hedge fund managers who were boosting their stakes considerably.

Of the funds we track, Dreman Value Management, managed by David Dreman, holds the most valuable position in W&T Offshore, Inc. (NYSE:WTI). Dreman Value Management has a $14.4 million position in the stock, comprising 0.4% of its 13F portfolio. Sitting at the No. 2 spot is AQR Capital Management, managed by Cliff Asness, which held a $6.4 million position; less than 0.1%% of its 13F portfolio is allocated to the stock. Other peers that are bullish include Israel Englander’s Millennium Management, Joel Greenblatt’s Gotham Asset Management and D. E. Shaw’s D E Shaw.

Seeing as W&T Offshore, Inc. (NYSE:WTI) has experienced falling interest from the aggregate hedge fund industry, it’s easy to see that there were a few fund managers that decided to sell off their full holdings heading into 2013. Interestingly, Ken Griffin’s Citadel Investment Group said goodbye to the largest position of all the hedgies we track, worth about $2.4 million in stock., and Abby Flamholz and Yehuda Blinder of ADAR Investment Management was right behind this move, as the fund said goodbye to about $2 million worth. These transactions are important to note, as aggregate hedge fund interest dropped by 3 funds heading into 2013.

What do corporate executives and insiders think about W&T Offshore, Inc. (NYSE:WTI)?

Insider trading activity, especially when it’s bullish, is particularly usable when the primary stock in question has experienced transactions within the past six months. Over the latest half-year time frame, W&T Offshore, Inc. (NYSE:WTI) has seen 2 unique insiders purchasing, and zero insider sales (see the details of insider trades here).

Let’s also examine hedge fund and insider activity in other stocks similar to W&T Offshore, Inc. (NYSE:WTI). These stocks are Approach Resources Inc. (NASDAQ:AREX), Hercules Offshore, Inc. (NASDAQ:HERO), Bill Barrett Corporation (NYSE:BBG), Seadrill Partners LLC (NYSE:SDLP), and Crestwood Midstream Partners LP (NYSE:CMLP). All of these stocks are in the oil & gas drilling & exploration industry and their market caps match WTI’s market cap.

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