Is W&T Offshore, Inc. (NYSE:WTI) a good investment?
To many investors, hedge funds are viewed as bloated, outdated investment vehicles of a forgotten age. Although there are over 8,000 hedge funds in operation today, Insider Monkey looks at the crème de la crème of this club, about 525 funds. Analysts calculate that this group oversees the lion’s share of all hedge funds’ total assets, and by keeping an eye on their highest performing investments, we’ve determined a few investment strategies that have historically outpaced the market. 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 outclassed the S&P 500 index by 33 percentage points in 11 months (see all of our picks from August).
Just as crucial, positive insider trading activity is another way to look at the financial markets. Just as you’d expect, there are a number of stimuli for an executive to get rid of shares of his or her company, but just one, very obvious reason why they would buy. Plenty of empirical studies have demonstrated the useful potential of this strategy if shareholders understand where to look (learn more here).
Keeping this in mind, it’s important to analyze the recent info about W&T Offshore, Inc. (NYSE:WTI).
How are hedge funds trading W&T Offshore, Inc. (NYSE:WTI)?
In preparation for the third quarter, a total of 10 of the hedge funds we track were long in this stock, a change of -9% from one quarter earlier. With the smart money’s sentiment swirling, there exists a select group of notable hedge fund managers who were increasing their holdings meaningfully.
When using filings from the hedgies we track, Highbridge Capital Management, managed by Glenn Russell Dubin, holds the biggest position in W&T Offshore, Inc. (NYSE:WTI). Highbridge Capital Management has a $6.5 million position in the stock, comprising 0.1% of its 13F portfolio. Sitting at the No. 2 spot is Millennium Management, managed by Israel Englander, which held a $5.6 million position; less than 0.1%% of its 13F portfolio is allocated to the stock. Other hedge funds that are bullish include Ken Griffin’s Citadel Investment Group, Charles Davidson’s Wexford Capital and Chuck Royce’s Royce & Associates.
Since W&T Offshore, Inc. (NYSE:WTI) has experienced dropping sentiment from the top-tier hedge fund industry, logic holds that there was a specific group of hedgies that decided to sell off their entire stakes at the end of the second quarter. Intriguingly, Jim Simons’s Renaissance Technologies dropped the largest stake of all the hedgies we watch, worth about $1.1 million in stock. Matthew Tewksbury’s fund, Stevens Capital Management, also dropped its stock, about $0.5 million worth. These bearish behaviors are intriguing to say the least, as aggregate hedge fund interest fell by 1 funds at the end of the second quarter.
What have insiders been doing with W&T Offshore, Inc. (NYSE:WTI)?
Legal insider trading, particularly when it’s bullish, is particularly usable when the company we’re looking at has experienced transactions within the past six months. Over the latest half-year time frame, W&T Offshore, Inc. (NYSE:WTI) has seen zero unique insiders purchasing, and zero insider sales (see the details of insider trades here).
We’ll check out the relationship between both of these indicators in other stocks similar to W&T Offshore, Inc. (NYSE:WTI). These stocks are Approach Resources Inc. (NASDAQ:AREX), Hercules Offshore, Inc. (NASDAQ:HERO), Bill Barrett Corporation (NYSE:BBG), Seadrill Partners LLC (NYSE:SDLP), and Crestwood Midstream Partners LP (NYSE:CMLP). This group of stocks are in the oil & gas drilling & exploration industry and their market caps resemble WTI’s market cap.