Chesapeake Energy Corporation (NYSE:CHK) investors need to understand that the smart money has been stagnant over the past quarter. Generally speaking, this isn’t a great sign, but it’s not time to panic either.
In the 21st century investor’s toolkit, there are tons of methods market participants can use to monitor their holdings. A couple of the best are hedge fund and insider trading activity. At Insider Monkey, our research analyses have shown that, historically, those who follow the top picks of the top hedge fund managers can outpace the broader indices by a solid amount (see just how much).
Equally as key, positive insider trading activity is another way to break down the investments you’re interested in. As the old adage goes: there are lots of reasons for an insider to get rid of shares of his or her company, but just one, very clear reason why they would behave bullishly. Many empirical studies have demonstrated the market-beating potential of this strategy if shareholders understand what to do (learn more here).
Consequently, it’s important to take a peek at the recent action encompassing Chesapeake Energy Corporation (NYSE:CHK).
Hedge fund activity in Chesapeake Energy Corporation (NYSE:CHK)
At Q1’s end, a total of 35 of the hedge funds we track were bullish in this stock, a change of 0% from one quarter earlier. With the smart money’s capital changing hands, there exists a select group of notable hedge fund managers who were increasing their holdings meaningfully.
When looking at the hedgies we track, Mason Hawkins’s Southeastern Asset Management had the most valuable position in Chesapeake Energy Corporation (NYSE:CHK), worth close to $1.7726 billion, comprising 8.7% of its total 13F portfolio. Coming in second is Icahn Capital LP, managed by Carl Icahn, which held a $1.2167 billion position; the fund has 5.7% of its 13F portfolio invested in the stock. Other peers that are bullish include William B. Gray’s Orbis Investment Management, Mohnish Pabrai’s Mohnish Pabrai and Israel Englander’s Millennium Management.
Seeing as Chesapeake Energy Corporation (NYSE:CHK) has faced less than ideal sentiment from the smart money, it’s easy to see that there lies a certain “tier” of hedge funds that slashed their entire stakes heading into Q2. It’s worth mentioning that Jeffrey Tannenbaum’s Fir Tree dumped the biggest position of the 450+ funds we track, comprising an estimated $40.8 million in stock. Jeffrey Vinik’s fund, Vinik Asset Management, also dumped its stock, about $22.9 million worth. These bearish behaviors are important to note, as aggregate hedge fund interest stayed the same (this is a bearish signal in our experience).
Insider trading activity in Chesapeake Energy Corporation (NYSE:CHK)
Insider buying is best served when the company in focus has seen transactions within the past 180 days. Over the latest half-year time frame, Chesapeake Energy Corporation (NYSE:CHK) has seen 4 unique insiders purchasing, and 4 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 Chesapeake Energy Corporation (NYSE:CHK). These stocks are Talisman Energy Inc. (USA) (NYSE:TLM), Nexen Inc. (USA) (NYSE:NXY), Cabot Oil & Gas Corporation (NYSE:COG), Southwestern Energy Company (NYSE:SWN), and Range Resources Corp. (NYSE:RRC). This group of stocks are the members of the independent oil & gas industry and their market caps are closest to CHK’s market cap.