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This Metric Says You Are Smart to Sell Hornbeck Offshore Services, Inc. (NYSE:HOS) – Exterran Partners, L.P. (NASDAQ:EXLP), CARBO Ceramics Inc. (NYSE:CRR)

Hornbeck Offshore Services, Inc. (NYSE:HOS) was in 11 hedge funds’ portfolio at the end of the fourth quarter of 2012. HOS shareholders have witnessed a decrease in activity from the world’s largest hedge funds recently. There were 13 hedge funds in our database with HOS positions at the end of the previous quarter.

To most market participants, hedge funds are seen as slow, old investment tools of the past. While there are more than 8000 funds trading today, we choose to focus on the bigwigs of this group, around 450 funds. It is estimated that this group controls most of the smart money’s total capital, and by watching their best picks, we have identified a number of investment strategies that have historically outstripped the broader indices. Our small-cap hedge fund strategy outperformed 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 outperformed the S&P 500 index by 25 percentage points in 6.5 month (check out a sample of our picks).

Hornbeck Offshore Services, Inc. (NYSE:HOS)

Equally as important, optimistic insider trading sentiment is a second way to break down the stock market universe. There are a number of reasons for an insider to sell shares of his or her company, but just one, very obvious reason why they would buy. Many empirical studies have demonstrated the impressive potential of this strategy if “monkeys” know where to look (learn more here).

With all of this in mind, it’s important to take a glance at the key action regarding Hornbeck Offshore Services, Inc. (NYSE:HOS).

Hedge fund activity in Hornbeck Offshore Services, Inc. (NYSE:HOS)

Heading into 2013, a total of 11 of the hedge funds we track were long in this stock, a change of -15% from the previous quarter. With hedgies’ capital changing hands, there exists a select group of key hedge fund managers who were upping their holdings substantially.

When looking at the hedgies we track, Debra Fine’s Fine Capital Partners had the most valuable position in Hornbeck Offshore Services, Inc. (NYSE:HOS), worth close to $64 million, accounting for 6.4% of its total 13F portfolio. Sitting at the No. 2 spot is Israel Englander of Millennium Management, with a $12 million position; 0.5% of its 13F portfolio is allocated to the stock. Other peers with similar optimism include SAC Subsidiary’s Sigma Capital Management, Richard Driehaus’s Driehaus Capital and D. E. Shaw’s D E Shaw.

Judging by the fact that Hornbeck Offshore Services, Inc. (NYSE:HOS) has faced bearish sentiment from the entirety of the hedge funds we track, it’s easy to see that there were a few funds that decided to sell off their entire stakes last quarter. At the top of the heap, Brian Taylor’s Pine River Capital Management said goodbye to the largest position of all the hedgies we track, comprising about $6 million in stock., and Peter Rathjens, Bruce Clarke and John Campbell of Arrowstreet Capital was right behind this move, as the fund said goodbye to about $2 million worth. These transactions are intriguing to say the least, as total hedge fund interest dropped by 2 funds last quarter.

Insider trading activity in Hornbeck Offshore Services, Inc. (NYSE:HOS)

Bullish insider trading is at its handiest when the company in question has experienced transactions within the past 180 days. Over the latest 180-day time period, Hornbeck Offshore Services, Inc. (NYSE:HOS) has experienced zero unique insiders purchasing, and 6 insider sales (see the details of insider trades here).

Let’s check out hedge fund and insider activity in other stocks similar to Hornbeck Offshore Services, Inc. (NYSE:HOS). These stocks are C&J Energy Services Inc (NYSE:CJES), Exterran Partners, L.P. (NASDAQ:EXLP), Energy XXI (Bermuda) Limited (NASDAQ:EXXI), CARBO Ceramics Inc. (NYSE:CRR), and Exterran Holdings, Inc. (NYSE:EXH). This group of stocks belong to the oil & gas equipment & services industry and their market caps resemble HOS’s market cap.

Company Name # of Hedge Funds # of Insiders Buying # of Insiders Selling
C&J Energy Services Inc (NYSE:CJES) 9 0 3
Exterran Partners, L.P. (NASDAQ:EXLP) 2 0 7
Energy XXI (Bermuda) Limited (NASDAQ:EXXI) 21 5 5
CARBO Ceramics Inc. (NYSE:CRR) 13 1 1
Exterran Holdings, Inc. (NYSE:EXH) 16 0 6

With the results demonstrated by Insider Monkey’s strategies, retail investors should always monitor hedge fund and insider trading activity, and Hornbeck Offshore Services, Inc. (NYSE:HOS) applies perfectly to this mantra.