SM Energy Co. (NYSE:SM) has seen an increase in activity from the world’s largest hedge funds in recent months.
If you’d ask most stock holders, hedge funds are seen as slow, outdated investment vehicles of the past. While there are greater than 8000 funds in operation today, we at Insider Monkey choose to focus on the leaders of this club, close to 450 funds. Most estimates calculate that this group oversees the majority of all hedge funds’ total capital, and by tracking their highest performing investments, we have unearthed a number of investment strategies that have historically beaten Mr. Market. 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 started sharing our picks with our subscribers at the end of August 2012, we have outclassed the S&P 500 index by 25 percentage points in 6.5 month (see the details here).
Equally as key, optimistic insider trading activity is another way to break down the world of equities. Just as you’d expect, there are many stimuli for a bullish insider to get rid of shares of his or her company, but only one, very clear reason why they would initiate a purchase. Plenty of academic studies have demonstrated the useful potential of this tactic if “monkeys” know what to do (learn more here).
Keeping this in mind, we’re going to take a look at the key action regarding SM Energy Co. (NYSE:SM).
What have hedge funds been doing with SM Energy Co. (NYSE:SM)?
At year’s end, a total of 16 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 upping their stakes significantly.
When looking at the hedgies we track, Balyasny Asset Management, managed by Dmitry Balyasny, holds the largest position in SM Energy Co. (NYSE:SM). Balyasny Asset Management has a $111 million position in the stock, comprising 3% of its 13F portfolio. Sitting at the No. 2 spot is Ken Griffin of Citadel Investment Group, with a $84 million position; 1.2% of its 13F portfolio is allocated to the stock. Other hedge funds that hold long positions include Steven Cohen’s SAC Capital Advisors, Peter Rathjens, Bruce Clarke and John Campbell’s Arrowstreet Capital and Jim Simons’s Renaissance Technologies.
Now, key money managers were leading the bulls’ herd. Cobalt Capital Management, managed by Wayne Cooperman, created the most outsized position in SM Energy Co. (NYSE:SM). Cobalt Capital Management had 14 million invested in the company at the end of the quarter. SAC Subsidiary’s Sigma Capital Management also initiated a $6 million position during the quarter. The other funds with brand new SM positions are Glenn Russell Dubin’s Highbridge Capital Management, John Fichthorn’s Dialectic Capital Management, and SAC Subsidiary’s CR Intrinsic Investors.
How have insiders been trading SM Energy Co. (NYSE:SM)?
Insider trading activity, especially when it’s bullish, is particularly usable when the primary stock in question has experienced transactions within the past 180 days. Over the latest six-month time period, SM Energy Co. (NYSE:SM) has experienced zero unique insiders purchasing, and 3 insider sales (see the details of insider trades here).
With the results exhibited by the aforementioned research, retail investors should always pay attention to hedge fund and insider trading activity, and SM Energy Co. (NYSE:SM) shareholders fit into this picture quite nicely.
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