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Why Devon Energy Corp (DVN) May Be a Sell

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Is Devon Energy Corp (NYSE:DVN) a sell?

To many market players, hedge funds are perceived as useless, old financial vehicles of an era lost to time. Although there are more than 8,000 hedge funds with their doors open in present day, Insider Monkey looks at the masters of this club, close to 525 funds. It is widely held that this group oversees most of the hedge fund industry’s total capital, and by tracking their highest quality stock picks, we’ve discovered a number of investment strategies that have historically outstripped the broader indices. Our small-cap hedge fund strategy outpaced the S&P 500 index by 18 percentage points a year 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 topped the S&P 500 index by 33 percentage points in 11 months (explore the details and some picks here).

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Devon Energy Corp

What’s more, we’re going to examine the newest info surrounding Devon Energy Corp (NYSE:DVN).

How are hedge funds trading Devon Energy Corp (NYSE:DVN)?

At the end of the second quarter, a total of 42 of the hedge funds we track held long positions in this stock, a change of -7% from the first quarter. With the smart money’s capital changing hands, there exists a select group of key hedge fund managers who were upping their stakes significantly.

Out of the hedge funds we follow, Harris Associates, managed by Natixis Global Asset Management, holds the most valuable position in Devon Energy Corp (NYSE:DVN). Harris Associates has a $870.1 million position in the stock, comprising 1.8% of its 13F portfolio. Coming in second is First Eagle Investment Management, managed by Matt McLennan, which held a $404.7 million position; 1.2% of its 13F portfolio is allocated to the company. Other hedgies that are bullish include Charles de Vaulx’s International Value Advisers, Edgar Wachenheim’s Greenhaven Associates and Martin Whitman’s Third Avenue Management.

As Devon Energy Corp (NYSE:DVN) has witnessed a fall in interest from the smart money’s best and brightest, we can see that there exists a select few hedge funds who sold off their entire stakes in Q1. Intriguingly, Robert Pohly’s Samlyn Capital said goodbye to the largest position of all the hedgies we key on, totaling about $28.4 million in stock, and Dmitry Balyasny of Balyasny Asset Management was right behind this move, as the fund dropped about $23.5 million worth. These transactions are intriguing to say the least, as aggregate hedge fund interest dropped by 3 funds in Q1.

How are insiders trading Devon Energy Corp (NYSE:DVN)?

Bullish insider trading is at its handiest when the company in question has experienced transactions within the past 180 days. Over the latest six-month time period, Devon Energy Corp (NYSE:DVN) has seen zero unique insiders buying, and 1 insider sales (see the details of insider trades here).

We’ll check out the relationship between both of these indicators in other stocks similar to Devon Energy Corp (NYSE:DVN). These stocks are EOG Resources Inc (NYSE:EOG), Continental Resources, Inc. (NYSE:CLR), Pioneer Natural Resources (NYSE:PXD), Apache Corporation (NYSE:APA), and Noble Energy, Inc. (NYSE:NBL). This group of stocks are in the independent oil & gas industry and their market caps are closest to DVN’s market cap.

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