Is Concho Resources Inc. (CXO) Going to Burn These Hedge Funds?

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Concho Resources Inc. (NYSE:CXO) was in 21 hedge funds’ portfolio at the end of the first quarter of 2013. CXO has seen a decrease in activity from the world’s largest hedge funds recently. There were 27 hedge funds in our database with CXO holdings at the end of the previous quarter.

According to most investors, hedge funds are seen as slow, old investment tools of yesteryear. While there are over 8000 funds trading at present, we at Insider Monkey choose to focus on the crème de la crème of this club, close to 450 funds. It is estimated that this group oversees the majority of the hedge fund industry’s total asset base, and by monitoring their best investments, we have deciphered a number of investment strategies that have historically outstripped the broader indices. Our small-cap hedge fund strategy beat 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 topped the S&P 500 index by 23.3 percentage points in 8 months (see all of our picks from August).

Concho Resources Inc. (NYSE:CXO)Just as important, bullish insider trading activity is another way to parse down the financial markets. There are lots of stimuli for a corporate insider to cut shares of his or her company, but only one, very simple reason why they would initiate a purchase. Various academic studies have demonstrated the valuable potential of this tactic if investors understand where to look (learn more here).

Keeping this in mind, it’s important to take a peek at the key action surrounding Concho Resources Inc. (NYSE:CXO).

What have hedge funds been doing with Concho Resources Inc. (NYSE:CXO)?

In preparation for this quarter, a total of 21 of the hedge funds we track held long positions in this stock, a change of -22% from one quarter earlier. With hedgies’ capital changing hands, there exists a few key hedge fund managers who were boosting their stakes meaningfully.

According to our comprehensive database, Citadel Investment Group, managed by Ken Griffin, holds the biggest position in Concho Resources Inc. (NYSE:CXO). Citadel Investment Group has a $78.5 million position in the stock, comprising 0.1% of its 13F portfolio. Sitting at the No. 2 spot is Magnetar Capital, managed by Alec Litowitz and Ross Laser, which held a $58.7 million position; the fund has 1.9% of its 13F portfolio invested in the stock. Some other hedgies that are bullish include Mark Kingdon’s Kingdon Capital, Robert Bishop’s Impala Asset Management and Richard Chilton’s Chilton Investment Company.

Seeing as Concho Resources Inc. (NYSE:CXO) has faced falling interest from the entirety of the hedge funds we track, logic holds that there is a sect of funds who sold off their positions entirely at the end of the first quarter. Intriguingly, Rob Citrone’s Discovery Capital Management dropped the largest position of the “upper crust” of funds we watch, worth close to $42.6 million in stock.. Jim Simons’s fund, Renaissance Technologies, also dropped its stock, about $21.5 million worth. These transactions are interesting, as aggregate hedge fund interest dropped by 6 funds at the end of the first quarter.

How are insiders trading Concho Resources Inc. (NYSE:CXO)?

Insider buying is most useful when the primary stock in question has experienced transactions within the past half-year. Over the last 180-day time frame, Concho Resources Inc. (NYSE:CXO) has experienced zero unique insiders purchasing, and 4 insider sales (see the details of insider trades here).

Let’s check out hedge fund and insider activity in other stocks similar to Concho Resources Inc. (NYSE:CXO). These stocks are Cheniere Energy, Inc. (NYSEAMEX:LNG), ENSCO PLC (NYSE:ESV), Markwest Energy Partners LP (NYSE:MWE), Noble Corporation (NYSE:NE), and Diamond Offshore Drilling Inc (NYSE:DO). This group of stocks are the members of the oil & gas drilling & exploration industry and their market caps are closest to CXO’s market cap.

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