Is EXCO Resources Inc (NYSE:XCO) the right pick for your portfolio? Hedge funds are getting less optimistic. The number of long hedge fund positions were cut by 4 recently.
In the eyes of most traders, hedge funds are viewed as underperforming, outdated financial tools of years past. While there are greater than 8000 funds trading at present, we hone in on the moguls of this club, about 450 funds. It is widely believed that this group controls the majority of the smart money’s total capital, and by monitoring their highest performing stock picks, we have found a number of investment strategies that have historically outpaced Mr. Market. 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 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 (see all of our picks from August).
Just as key, positive insider trading sentiment is a second way to break down the marketplace. Obviously, there are lots of stimuli for an upper level exec to sell shares of his or her company, but just one, very clear reason why they would behave bullishly. Several empirical studies have demonstrated the impressive potential of this tactic if shareholders understand what to do (learn more here).
With these “truths” under our belt, we’re going to take a gander at the key action regarding EXCO Resources Inc (NYSE:XCO).
What does the smart money think about EXCO Resources Inc (NYSE:XCO)?
At Q1’s end, a total of 17 of the hedge funds we track held long positions in this stock, a change of -19% from the previous quarter. With the smart money’s sentiment swirling, there exists an “upper tier” of noteworthy hedge fund managers who were boosting their stakes meaningfully.
According to our comprehensive database, Howard Marks’s Oaktree Capital Management had the most valuable position in EXCO Resources Inc (NYSE:XCO), worth close to $262.2 million, accounting for 5.3% of its total 13F portfolio. The second largest stake is held by Invesco Private Capital (WL Ross), managed by Wilbur Ross, which held a $224.6 million position; the fund has 22.6% of its 13F portfolio invested in the stock. Remaining hedge funds that are bullish include Prem Watsa’s Fairfax Financial Holdings, Phil Falcone’s Harbinger and Jim Simons’s Renaissance Technologies.
Judging by the fact that EXCO Resources Inc (NYSE:XCO) has faced declining sentiment from the entirety of the hedge funds we track, it’s easy to see that there lies a certain “tier” of hedgies that elected to cut their full holdings last quarter. It’s worth mentioning that Steven Cohen’s SAC Capital Advisors cut the biggest stake of the 450+ funds we watch, worth close to $1.9 million in stock.. Abby Flamholz and Yehuda Blinder’s fund, ADAR Investment Management, also said goodbye to its stock, about $1.4 million worth. These bearish behaviors are interesting, as aggregate hedge fund interest was cut by 4 funds last quarter.
What do corporate executives and insiders think about EXCO Resources Inc (NYSE:XCO)?
Insider purchases made by high-level executives is best served when the company we’re looking at has experienced transactions within the past half-year. Over the last 180-day time frame, EXCO Resources Inc (NYSE:XCO) has seen zero unique insiders buying, and zero insider sales (see the details of insider trades here).
Let’s check out hedge fund and insider activity in other stocks similar to EXCO Resources Inc (NYSE:XCO). These stocks are Crosstex Energy, L.P. (NASDAQ:XTEX), PDC Energy Inc (NASDAQ:PDCE), Enbridge Energy Management, L.L.C. (NYSE:EEQ), Gran Tierra Energy Inc. (NYSEAMEX:GTE), and Bonanza Creek Energy Inc (NYSE:BCEI). This group of stocks are in the independent oil & gas industry and their market caps resemble XCO’s market cap.
|Company Name||# of Hedge Funds||# of Insiders Buying||# of Insiders Selling|
|Crosstex Energy, L.P. (NASDAQ:XTEX)||8||0||2|
|PDC Energy Inc (NASDAQ:PDCE)||19||0||3|
|Enbridge Energy Management, L.L.C. (NYSE:EEQ)||6||3||0|
|Gran Tierra Energy Inc. (NYSEAMEX:GTE)||17||0||1|
|Bonanza Creek Energy Inc (NYSE:BCEI)||16||0||2|
With the results shown by Insider Monkey’s tactics, everyday investors should always watch hedge fund and insider trading activity, and EXCO Resources Inc (NYSE:XCO) applies perfectly to this mantra.