Is Seadrill Ltd (NYSE:SDRL) a buy here? The best stock pickers are getting more bullish. The number of long hedge fund positions increased by 3 lately.
To the average investor, there are tons of metrics investors can use to analyze their holdings. A duo of the most useful are hedge fund and insider trading interest. At Insider Monkey, our research analyses have shown that, historically, those who follow the top picks of the elite investment managers can beat the broader indices by a significant margin (see just how much).
Just as integral, optimistic insider trading activity is a second way to break down the investments you’re interested in. Obviously, there are a number of motivations for a bullish insider to get rid of shares of his or her company, but just one, very obvious reason why they would behave bullishly. Many empirical studies have demonstrated the useful potential of this method if piggybackers know what to do (learn more here).
Now, let’s take a look at the recent action regarding Seadrill Ltd (NYSE:SDRL).
What have hedge funds been doing with Seadrill Ltd (NYSE:SDRL)?
In preparation for this year, a total of 17 of the hedge funds we track were long in this stock, a change of 21% from the third quarter. With the smart money’s capital changing hands, there exists a few noteworthy hedge fund managers who were increasing their stakes substantially.
According to our comprehensive database, Renaissance Technologies, managed by Jim Simons, holds the largest position in Seadrill Ltd (NYSE:SDRL). Renaissance Technologies has a $101 million position in the stock, comprising 0.3% of its 13F portfolio. On Renaissance Technologies’s heels is Highbridge Capital Management, managed by Glenn Russell Dubin, which held a $43 million position; 0.7% of its 13F portfolio is allocated to the company. Remaining hedge funds with similar optimism include John Overdeck and David Siegel’s Two Sigma Advisors, Ken Griffin’s Citadel Investment Group and Charles Clough’s Clough Capital Partners.
As aggregate interest increased, key hedge funds were leading the bulls’ herd. Highbridge Capital Management, managed by Glenn Russell Dubin, assembled the most outsized position in Seadrill Ltd (NYSE:SDRL). Highbridge Capital Management had 43 million invested in the company at the end of the quarter. John Burbank’s Passport Capital also initiated a $4 million position during the quarter. The other funds with brand new SDRL positions are Mark Kingdon’s Kingdon Capital, Ken Gray and Steve Walsh’s Bryn Mawr Capital, and John Zaro’s Bourgeon Capital.
How have insiders been trading Seadrill Ltd (NYSE:SDRL)?
Insider trading activity, especially when it’s bullish, is particularly usable when the company in question has seen transactions within the past 180 days. Over the last six-month time frame, Seadrill Ltd (NYSE:SDRL) has experienced zero unique insiders purchasing, and zero insider sales (see the details of insider trades here).
Let’s go over hedge fund and insider activity in other stocks similar to Seadrill Ltd (NYSE:SDRL). These stocks are Diamond Offshore Drilling Inc (NYSE:DO), Concho Resources Inc. (NYSE:CXO), Cenovus Energy Inc (USA) (NYSE:CVE), ENSCO PLC (NYSE:ESV), and Transocean LTD (NYSE:RIG). This group of stocks are the members of the oil & gas drilling & exploration industry and their market caps match SDRL’s market cap.
|Company Name||# of Hedge Funds||# of Insiders Buying||# of Insiders Selling|
|Diamond Offshore Drilling Inc (NYSE:DO)||13||0||0|
|Concho Resources Inc. (NYSE:CXO)||25||0||4|
|Cenovus Energy Inc (USA) (NYSE:CVE)||18||0||0|
|ENSCO PLC (NYSE:ESV)||26||1||5|
|Transocean LTD (NYSE:RIG)||35||0||2|
With the results exhibited by our time-tested strategies, everyday investors must always watch hedge fund and insider trading activity, and Seadrill Ltd (NYSE:SDRL) is no exception.
Insider Monkey’s small-cap strategy returned 37% between September 2012 and March 2013 versus 12.9% for the S&P 500 index. Try it now by clicking the link above.