Hedge Funds Are Dumping EPL Oil & Gas Inc (EPL)

Is EPL Oil & Gas Inc (NYSE:EPL) undervalued? The smart money is getting less bullish. The number of bullish hedge fund bets stayed the same which is a slightly negative development in our experience

According to most traders, hedge funds are viewed as slow, old investment tools of yesteryear. While there are more than 8000 funds trading today, we at Insider Monkey choose to focus on the top tier of this club, about 450 funds. Most estimates calculate that this group has its hands on the majority of the smart money’s total asset base, and by keeping an eye on their top stock picks, we have unearthed a few investment strategies that have historically outpaced the market. Our small-cap hedge fund strategy outperformed the S&P 500 index by 18 percentage points per annum 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 beaten the S&P 500 index by 23.3 percentage points in 8 months (check out a sample of our picks).

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Now, let’s take a gander at the latest action surrounding EPL Oil & Gas Inc (NYSE:EPL).

What have hedge funds been doing with EPL Oil & Gas Inc (NYSE:EPL)?

In preparation for this quarter, a total of 14 of the hedge funds we track held long positions in this stock, a change of 0% from the previous quarter. With hedgies’ capital changing hands, there exists a select group of notable hedge fund managers who were increasing their holdings considerably.

Of the funds we track, Wexford Capital, managed by Charles Davidson, holds the largest position in EPL Oil & Gas Inc (NYSE:EPL). Wexford Capital has a $130.8 million position in the stock, comprising 10.4% of its 13F portfolio. The second largest stake is held by Clint Carlson of Carlson Capital, with a $75.4 million position; 1% of its 13F portfolio is allocated to the company. Other peers that are bullish include Cliff Asness’s AQR Capital Management, Chuck Royce’s Royce & Associates and Andy Redleaf’s Whitebox Advisors.

Seeing as EPL Oil & Gas Inc (NYSE:EPL) has witnessed declining sentiment from the entirety of the hedge funds we track, it’s easy to see that there is a sect of fund managers who sold off their entire stakes heading into Q2. It’s worth mentioning that Seth Hamot’s Roark, Rearden & Hamot Capital Management dumped the largest investment of the 450+ funds we watch, valued at close to $0.9 million in stock.. Peter Rathjens, Bruce Clarke and John Campbell’s fund, Arrowstreet Capital, also said goodbye to its stock, about $0.8 million worth. These bearish behaviors are important to note, as total hedge fund interest stayed the same (this is a bearish signal in our experience).

How have insiders been trading EPL Oil & Gas Inc (NYSE:EPL)?

Bullish insider trading is particularly usable when the company we’re looking at has seen transactions within the past 180 days. Over the latest six-month time frame, EPL Oil & Gas Inc (NYSE:EPL) has experienced zero unique insiders buying, and 5 insider sales (see the details of insider trades here).

Let’s also review hedge fund and insider activity in other stocks similar to EPL Oil & Gas Inc (NYSE:EPL). These stocks are LinnCo LLC (NASDAQ:LNCO), QR Energy LP (NYSE:QRE), Diamondback Energy Inc (NASDAQ:FANG), Stone Energy Corporation (NYSE:SGY), and Carrizo Oil & Gas, Inc. (NASDAQ:CRZO). This group of stocks belong to the independent oil & gas industry and their market caps are closest to EPL’s market cap.