Hedge Funds Are Dumping Atmos Energy Corporation (ATO)

Is Atmos Energy Corporation (NYSE:ATO) a superb stock to buy now? Hedge funds are getting less bullish. The number of bullish hedge fund positions decreased by 3 in recent months.

According to most investors, hedge funds are assumed to be slow, outdated investment tools of years past. While there are more than 8000 funds in operation at present, we at Insider Monkey hone in on the top tier of this club, close to 450 funds. It is estimated that this group controls the lion’s share of the smart money’s total capital, and by monitoring their best picks, we have spotted a few investment strategies that have historically beaten the S&P 500 index. Our small-cap hedge fund strategy outperformed 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 beaten the S&P 500 index by 24 percentage points in 7 months (check out a sample of our picks).

Equally as integral, positive insider trading activity is another way to parse down the financial markets. There are a number of motivations for an insider to downsize shares of his or her company, but only one, very simple reason why they would initiate a purchase. Many empirical studies have demonstrated the market-beating potential of this strategy if shareholders know where to look (learn more here).

With all of this in mind, let’s take a glance at the key action surrounding Atmos Energy Corporation (NYSE:ATO).

How are hedge funds trading Atmos Energy Corporation (NYSE:ATO)?

At year’s end, a total of 5 of the hedge funds we track were long in this stock, a change of -38% from the previous quarter. With hedge funds’ positions undergoing their usual ebb and flow, there exists an “upper tier” of key hedge fund managers who were increasing their stakes considerably.

Of the funds we track, Adage Capital Management, managed by Phill Gross and Robert Atchinson, holds the most valuable position in Atmos Energy Corporation (NYSE:ATO). Adage Capital Management has a $29.9 million position in the stock, comprising 0.1% of its 13F portfolio. Sitting at the No. 2 spot is Renaissance Technologies, managed by Jim Simons, which held a $6.3 million position; the fund has less than 0.1%% of its 13F portfolio invested in the stock. Some other hedge funds with similar optimism include Claes Fornell’s CSat Investment Advisory, Cliff Asness’s AQR Capital Management and Israel Englander’s Millennium Management.

Because Atmos Energy Corporation (NYSE:ATO) has experienced falling interest from the aggregate hedge fund industry, it’s easy to see that there was a specific group of hedge funds who were dropping their full holdings last quarter. Interestingly, Ken Griffin’s Citadel Investment Group dropped the biggest investment of the “upper crust” of funds we monitor, worth an estimated $2.9 million in stock., and D. E. Shaw of D E Shaw was right behind this move, as the fund sold off about $1.7 million worth. These transactions are interesting, as total hedge fund interest dropped by 3 funds last quarter.

What do corporate executives and insiders think about Atmos Energy Corporation (NYSE:ATO)?

Insider purchases made by high-level executives is at its handiest when the company in question has seen transactions within the past six months. Over the last 180-day time period, Atmos Energy Corporation (NYSE:ATO) has seen zero unique insiders buying, and 3 insider sales (see the details of insider trades here).

Let’s also examine hedge fund and insider activity in other stocks similar to Atmos Energy Corporation (NYSE:ATO). These stocks are Targa Resources Corp (NYSE:TRGP), AGL Resources Inc. (NYSE:GAS), Integrys Energy Group, Inc. (NYSE:TEG), Questar Corporation (NYSE:STR), and AmeriGas Partners, L.P. (NYSE:APU). This group of stocks are in the gas utilities industry and their market caps are closest to ATO’s market cap.