Should You Buy Piedmont Natural Gas Company, Inc. (PNY)?

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Piedmont Natural Gas Company, Inc. (NYSE:PNY) investors should be aware of an increase in hedge fund sentiment of late.

To most market participants, hedge funds are viewed as slow, outdated investment tools of yesteryear. While there are greater than 8000 funds in operation at the moment, we hone in on the upper echelon of this club, close to 450 funds. Most estimates calculate that this group oversees the lion’s share of the hedge fund industry’s total capital, and by tracking their best stock picks, we have figured out a few investment strategies that have historically outpaced the market. Our small-cap hedge fund strategy outstripped 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 trumped the S&P 500 index by 23.3 percentage points in 8 months (explore the details and some picks here).

Equally as integral, optimistic insider trading activity is a second way to parse down the world of equities. Just as you’d expect, there are a variety of stimuli for an upper level exec to get rid of shares of his or her company, but just one, very simple reason why they would initiate a purchase. Various academic studies have demonstrated the market-beating potential of this tactic if piggybackers know what to do (learn more here).

With these “truths” under our belt, let’s take a look at the key action regarding Piedmont Natural Gas Company, Inc. (NYSE:PNY).

How are hedge funds trading Piedmont Natural Gas Company, Inc. (NYSE:PNY)?

At Q1’s end, a total of 9 of the hedge funds we track were bullish in this stock, a change of 80% from the previous quarter. With hedge funds’ positions undergoing their usual ebb and flow, there exists a select group of key hedge fund managers who were upping their stakes meaningfully.

Piedmont Natural Gas Company, Inc. (NYSE:PNY)According to our comprehensive database, Royce & Associates, managed by Chuck Royce, holds the largest position in Piedmont Natural Gas Company, Inc. (NYSE:PNY). Royce & Associates has a $17.7 million position in the stock, comprising 0.1% of its 13F portfolio. On Royce & Associates’s heels is Citadel Investment Group, managed by Ken Griffin, which held a $8.1 million position; less than 0.1%% of its 13F portfolio is allocated to the company. Remaining hedgies with similar optimism include Israel Englander’s Millennium Management, Jim Simons’s Renaissance Technologies and Ken Gray and Steve Walsh’s Bryn Mawr Capital.

Consequently, specific money managers were breaking ground themselves. Millennium Management, managed by Israel Englander, initiated the largest position in Piedmont Natural Gas Company, Inc. (NYSE:PNY). Millennium Management had 3.7 million invested in the company at the end of the quarter. Ken Gray and Steve Walsh’s Bryn Mawr Capital also initiated a $2 million position during the quarter. The other funds with new positions in the stock are Thomas M. Fitzgerald’s Longbow Capital Partners, D. E. Shaw’s D E Shaw, and John A. Levin’s Levin Capital Strategies.

Insider trading activity in Piedmont Natural Gas Company, Inc. (NYSE:PNY)

Insider trading activity, especially when it’s bullish, is best served when the company in question has experienced transactions within the past half-year. Over the last six-month time period, Piedmont Natural Gas Company, Inc. (NYSE:PNY) has experienced 1 unique insiders buying, and 1 insider sales (see the details of insider trades here).

Let’s also review hedge fund and insider activity in other stocks similar to Piedmont Natural Gas Company, Inc. (NYSE:PNY). These stocks are Southwest Gas Corporation (NYSE:SWX), Atlas Energy LP (NYSE:ATLS), WGL Holdings Inc (NYSE:WGL), Inergy, L.P. (NYSE:NRGY), and Suburban Propane Partners LP (NYSE:SPH). This group of stocks are the members of the gas utilities industry and their market caps are similar to PNY’s market cap.

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