Newfield Exploration Co. (NFX): Insiders Aren’t Crazy About It

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Is Newfield Exploration Co. (NYSE:NFX) the right pick for your portfolio? Investors who are in the know are reducing their bets on the stock. The number of bullish hedge fund bets shrunk by 2 recently.

In the eyes of most investors, hedge funds are assumed to be unimportant, outdated investment tools of the past. While there are greater than 8000 funds in operation today, we at Insider Monkey choose to focus on the leaders of this club, close to 450 funds. Most estimates calculate that this group oversees the majority of all hedge funds’ total capital, and by keeping an eye on their best equity investments, we have spotted a few investment strategies that have historically beaten the broader indices. 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 started 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 the details here).

MILLENNIUM MANAGEMENTJust as beneficial, bullish insider trading activity is a second way to break down the investments you’re interested in. Obviously, there are many motivations for an upper level exec to get rid of shares of his or her company, but only one, very simple reason why they would buy. Plenty of empirical studies have demonstrated the impressive potential of this method if you understand where to look (learn more here).

Now, we’re going to take a glance at the recent action regarding Newfield Exploration Co. (NYSE:NFX).

What does the smart money think about Newfield Exploration Co. (NYSE:NFX)?

Heading into Q2, a total of 22 of the hedge funds we track were long in this stock, a change of -8% from the previous quarter. With the smart money’s sentiment swirling, there exists an “upper tier” of key hedge fund managers who were increasing their holdings considerably.

According to our comprehensive database, Robert Rodriguez and Steven Romick’s First Pacific Advisors LLC had the largest position in Newfield Exploration Co. (NYSE:NFX), worth close to $56.6 million, accounting for 0.6% of its total 13F portfolio. On First Pacific Advisors LLC’s heels is Israel Englander of Millennium Management, with a $38.5 million position; the fund has 0.2% of its 13F portfolio invested in the stock. Other peers that are bullish include Glenn Russell Dubin’s Highbridge Capital Management, Cliff Asness’s AQR Capital Management and Ron Gutfleish’s Elm Ridge Capital.

Judging by the fact that Newfield Exploration Co. (NYSE:NFX) has witnessed bearish sentiment from the smart money, we can see that there was a specific group of money managers that decided to sell off their positions entirely last quarter. Intriguingly, Dmitry Balyasny’s Balyasny Asset Management dumped the biggest stake of all the hedgies we key on, valued at an estimated $77.4 million in stock.. Peter Rathjens, Bruce Clarke and John Campbell’s fund, Arrowstreet Capital, also cut its stock, about $65.2 million worth. These bearish behaviors are important to note, as aggregate hedge fund interest dropped by 2 funds last quarter.

How have insiders been trading Newfield Exploration Co. (NYSE:NFX)?

Insider purchases made by high-level executives is best served when the primary stock in question has seen transactions within the past half-year. Over the last six-month time period, Newfield Exploration Co. (NYSE:NFX) has seen zero unique insiders purchasing, and 4 insider sales (see the details of insider trades here).

Let’s also review hedge fund and insider activity in other stocks similar to Newfield Exploration Co. (NYSE:NFX). These stocks are Oasis Petroleum Inc. (NYSE:OAS), Gulfport Energy Corporation (NASDAQ:GPOR), Mcmoran Exploration Co (NYSE:MMR), WPX Energy Inc (NYSE:WPX), and Ultra Petroleum Corp. (NYSE:UPL). This group of stocks are in the independent oil & gas industry and their market caps are similar to NFX’s market cap.

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