Hedge Funds Aren’t Crazy About Halcon Resources Corp (HK) Anymore

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Should Halcon Resources Corp (NYSE:HK) investors track the following data?

In the eyes of many market players, hedge funds are perceived as overrated, old financial tools of a forgotten age. Although there are over 8,000 hedge funds in operation in present day, this site aim at the crème de la crème of this club, close to 525 funds. Analysts calculate that this group controls the lion’s share of the smart money’s total capital, and by monitoring their best picks, we’ve deciphered a few investment strategies that have historically outpaced Mr. Market. Our small-cap hedge fund strategy outpaced the S&P 500 index by 18 percentage points annually 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 trumped the S&P 500 index by 33 percentage points in 11 months (find a sample of our picks).

Just as useful, optimistic insider trading sentiment is another way to analyze the marketplace. Obviously, there are a variety of motivations for an executive to downsize shares of his or her company, but just one, very clear reason why they would behave bullishly. Various empirical studies have demonstrated the valuable potential of this strategy if “monkeys” understand where to look (learn more here).

Now that that’s out of the way, let’s examine the recent info surrounding Halcon Resources Corp (NYSE:HK).

What does the smart money think about Halcon Resources Corp (NYSE:HK)?

In preparation for the third quarter, a total of 13 of the hedge funds we track were long in this stock, a change of -19% from the previous quarter. With hedgies’ capital changing hands, there exists an “upper tier” of key hedge fund managers who were boosting their holdings meaningfully.

Halcon Resources CorpWhen using filings from the hedgies we track, Regiment Capital, managed by Timothy S. Peterson, holds the most valuable position in Halcon Resources Corp (NYSE:HK). Regiment Capital has a $17.6 million call position in the stock, comprising 5% of its 13F portfolio. Sitting at the No. 2 spot is Farallon Capital, managed by Andrew J. M. Spokes, which held a $14 million position; the fund has 0.3% of its 13F portfolio invested in the stock. Other hedgies with similar optimism include Scott Sinclair and Laurence Chang’s Cascabel Management, Russell Lucas’s Lucas Capital Management and Arvind Sanger’s GeoSphere Capital Management.

As Halcon Resources Corp (NYSE:HK) has experienced declining interest from the entirety of the hedge funds we track, it’s safe to say that there exists a select few money managers who sold off their positions entirely at the end of the second quarter. Interestingly, Ken Griffin’s Citadel Investment Group dumped the largest position of the “upper crust” of funds we monitor, valued at about $121.6 million in stock, and Steven Cohen of SAC Capital Advisors was right behind this move, as the fund dropped about $8.9 million worth. These transactions are interesting, as total hedge fund interest dropped by 3 funds at the end of the second quarter.

How are insiders trading Halcon Resources Corp (NYSE:HK)?

Bullish insider trading is particularly usable when the company in question has experienced transactions within the past 180 days. Over the last six-month time frame, Halcon Resources Corp (NYSE:HK) has experienced zero unique insiders purchasing, and zero insider sales (see the details of insider trades here).

We’ll also examine the relationship between both of these indicators in other stocks similar to Halcon Resources Corp (NYSE:HK). These stocks are Atwood Oceanics, Inc. (NYSE:ATW), Kodiak Oil & Gas Corp (USA) (NYSE:KOG), SandRidge Energy Inc. (NYSE:SD), Pengrowth Energy Corp (USA) (NYSE:PGH), and Enerplus Corp (USA) (NYSE:ERF). This group of stocks are in the oil & gas drilling & exploration industry and their market caps are closest to HK’s market cap.

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