Is Sempra Energy (NYSE:SRE) a buy right now? Investors who are in the know are getting less optimistic. The number of bullish hedge fund positions were cut by 1 recently.
In today’s marketplace, there are plenty of gauges market participants can use to analyze Mr. Market. A pair of the most useful are hedge fund and insider trading movement. At Insider Monkey, our research analyses have shown that, historically, those who follow the top picks of the best hedge fund managers can outpace their index-focused peers by a healthy amount (see just how much).
Just as integral, optimistic insider trading sentiment is a second way to break down the world of equities. As the old adage goes: there are a number of incentives for an insider to downsize shares of his or her company, but only one, very obvious reason why they would initiate a purchase. Various empirical studies have demonstrated the useful potential of this strategy if “monkeys” know where to look (learn more here).
Now, it’s important to take a peek at the latest action regarding Sempra Energy (NYSE:SRE).
What have hedge funds been doing with Sempra Energy (NYSE:SRE)?
At the end of the fourth quarter, a total of 12 of the hedge funds we track held long positions in this stock, a change of -8% from the previous quarter. With hedge funds’ sentiment swirling, there exists an “upper tier” of notable hedge fund managers who were increasing their stakes meaningfully.
When looking at the hedgies we track, Israel Englander’s Millennium Management had the biggest position in Sempra Energy (NYSE:SRE), worth close to $40 million, accounting for 0.3% of its total 13F portfolio. On Millennium Management’s heels is John A. Levin of Levin Capital Strategies, with a $24 million position; the fund has 0.5% of its 13F portfolio invested in the stock. Some other hedge funds that are bullish include Phill Gross and Robert Atchinson’s Adage Capital Management, David Harding’s Winton Capital Management and Jacob Gottlieb’s Visium Asset Management.
Due to the fact that Sempra Energy (NYSE:SRE) has witnessed declining sentiment from the smart money, logic holds that there were a few hedge funds who sold off their entire stakes last quarter. It’s worth mentioning that SAC Subsidiary’s CR Intrinsic Investors sold off the biggest investment of all the hedgies we watch, comprising about $8 million in stock.. Tim Flannery’s fund, Copia Capital, also sold off its stock, about $4 million worth. These bearish behaviors are interesting, as aggregate hedge fund interest dropped by 1 funds last quarter.
What have insiders been doing with Sempra Energy (NYSE:SRE)?
Insider trading activity, especially when it’s bullish, is at its handiest when the primary stock in question has experienced transactions within the past half-year. Over the latest six-month time frame, Sempra Energy (NYSE:SRE) has seen zero unique insiders purchasing, and 9 insider sales (see the details of insider trades here).
Let’s also examine hedge fund and insider activity in other stocks similar to Sempra Energy (NYSE:SRE). These stocks are Western Gas Equity Partners LP (NYSE:WGP), National Grid plc (ADR) (NYSE:NGG), ONEOK, Inc. (NYSE:OKE), EQT Corporation (NYSE:EQT), and TransCanada Corporation (USA) (NYSE:TRP). This group of stocks belong to the gas utilities industry and their market caps resemble SRE’s market cap.
|Company Name||# of Hedge Funds||# of Insiders Buying||# of Insiders Selling|
|Western Gas Equity Partners LP (NYSE:WGP)||2||9||0|
|National Grid plc (ADR) (NYSE:NGG)||8||0||0|
|ONEOK, Inc. (NYSE:OKE)||14||0||1|
|EQT Corporation (NYSE:EQT)||28||3||3|
|TransCanada Corporation (USA) (NYSE:TRP)||4||0||0|
With the results exhibited by Insider Monkey’s strategies, retail investors should always keep an eye on hedge fund and insider trading activity, and Sempra Energy (NYSE:SRE) applies perfectly to this mantra.
Insider Monkey’s small-cap strategy returned 37% between September 2012 and March 2013 versus 12.9% for the S&P 500 index. Try it now by clicking the link above.