Linn Energy LLC (NASDAQ:LINE) is a niche favorite of many energy-focused investors, but it doesn't stretch beyond that. In this case, it's worth seeing what the richest investors are doing with the stock.
To many of your peers, hedge funds are seen as useless, old investment vehicles of a forgotten age. Although there are more than 8,000 hedge funds in operation currently, this site focuses on the crème de la crème of this group, about 525 funds. Analysts calculate that this group controls the majority of the smart money's total assets, and by tracking their best stock picks, we've found a few investment strategies that have historically beaten Mr. Market. Our small-cap hedge fund strategy outpaced 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 33 percentage points in 11 months (explore the details and some picks here).
Just as useful, optimistic insider trading sentiment is another way to analyze the financial markets. Obviously, there are a number of reasons for a bullish insider to downsize shares of his or her company, but just one, very clear reason why they would buy. Several academic studies have demonstrated the valuable potential of this method if piggybackers know where to look (learn more here).
Keeping this in mind, let's discuss the recent info about Linn Energy LLC (NASDAQ:LINE).
In preparation for the third quarter, a total of 10 of the hedge funds we track were long in this stock, a change of -17% from one quarter earlier. With hedgies' positions undergoing their usual ebb and flow, there exists a select group of noteworthy hedge fund managers who were upping their holdings substantially.
When using filings from the hedgies we track, Omega Advisors, managed by Leon Cooperman, holds the biggest position in Linn Energy LLC (NASDAQ:LINE). Omega Advisors has a $207.9 million position in the stock, comprising 3.2% of its 13F portfolio. Coming in second is Philip Hempleman of Ardsley Partners, with a $17.4 million position; 3.8% of its 13F portfolio is allocated to the company. Remaining hedgies with similar optimism include Eric Edidin and Josh Lobel's Archer Capital Management, Matthew Hulsizer's PEAK6 Capital Management and Ken Griffin's Citadel Investment Group.
Due to the fact Linn Energy LLC (NASDAQ:LINE) has experienced dropping sentiment from upper-tier hedge fund managers, we can see that there were a few funds who were dropping their positions entirely at the end of the second quarter. It's worth mentioning that Jim Simons's Renaissance Technologies dropped the largest investment of all the hedgies we key on, worth an estimated $8.2 million in stock. Daniel S. Och's fund, OZ Management, also cut its stock, about $3.8 million worth. These moves are interesting, as aggregate hedge fund interest fell by 2 funds at the end of the second quarter.
Insider buying is best served when the company we're looking at has seen transactions within the past half-year. Over the latest six-month time frame, Linn Energy LLC (NASDAQ:LINE) has seen 4 unique insiders purchasing, and zero insider sales (see the details of insider trades here).
We'll also examine the relationship between both of these indicators in other stocks similar to Linn Energy LLC (NASDAQ:LINE). These stocks are Plains Exploration & Production Company (NYSE:PXP), Talisman Energy Inc. (USA) (NYSE:TLM), Cimarex Energy Co (NYSE:XEC), Cobalt International Energy, Inc. (NYSE:CIE), and Denbury Resources Inc. (NYSE:DNR). This group of stocks are in the independent oil & gas industry and their market caps resemble LINE's market cap.