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Our extensive research has shown that imitating the smart money can generate significant returns for retail investors, which is why we track nearly 900 active prominent money managers and analyze their quarterly 13F filings. The stocks that are heavily bought by hedge funds historically outperformed the market, though there is no shortage of high profile failures like hedge funds' 2018 losses in Facebook and Apple. Let’s take a closer look at what the funds we track think about Natural Gas Services Group, Inc. (NYSE:NGS) in this article.
Is Natural Gas Services Group, Inc. (NYSE:NGS) a marvelous investment now? Hedge funds were cutting their exposure. The number of bullish hedge fund bets decreased by 4 lately. Natural Gas Services Group, Inc. (NYSE:NGS) was in 6 hedge funds' portfolios at the end of the first quarter of 2021. The all time high for this statistic is 12. Our calculations also showed that NGS isn't among the 30 most popular stocks among hedge funds (click for Q1 rankings).
Hedge funds' reputation as shrewd investors has been tarnished in the last decade as their hedged returns couldn't keep up with the unhedged returns of the market indices. Hedge funds have more than $3.5 trillion in assets under management, so you can't expect their entire portfolios to beat the market by large margins. Our research was able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by more than 115 percentage points since March 2017 (see the details here). So you can still find a lot of gems by following hedge funds' moves today.
John Overdeck of Two Sigma Advisors
At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, an activist hedge fund owns nearly 40% of this $24 biotech stock and is trying to buy the rest for around $50. So, we recommended a long position to our monthly premium newsletter subscribers. We go through lists like the 10 best battery stocks to pick the next Tesla that will deliver a 10x return. Even though we recommend positions in only a tiny fraction of the companies we analyze, we check out as many stocks as we can. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. You can subscribe to our free daily newsletter on our homepage. Keeping this in mind we're going to take a gander at the latest hedge fund action regarding Natural Gas Services Group, Inc. (NYSE:NGS).
Do Hedge Funds Think NGS Is A Good Stock To Buy Now?
At Q1's end, a total of 6 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -40% from one quarter earlier. On the other hand, there were a total of 10 hedge funds with a bullish position in NGS a year ago. So, let's see which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
Among these funds, Mill Road Capital Management held the most valuable stake in Natural Gas Services Group, Inc. (NYSE:NGS), which was worth $8.3 million at the end of the fourth quarter. On the second spot was Renaissance Technologies which amassed $6.5 million worth of shares. Royce & Associates, Millennium Management, and Two Sigma Advisors were also very fond of the stock, becoming one of the largest hedge fund holders of the company. In terms of the portfolio weights assigned to each position Mill Road Capital Management allocated the biggest weight to Natural Gas Services Group, Inc. (NYSE:NGS), around 2.76% of its 13F portfolio. Royce & Associates is also relatively very bullish on the stock, earmarking 0.03 percent of its 13F equity portfolio to NGS.
Since Natural Gas Services Group, Inc. (NYSE:NGS) has experienced a decline in interest from hedge fund managers, it's safe to say that there lies a certain "tier" of hedge funds that decided to sell off their full holdings last quarter. Interestingly, Touk Sinantha's AltraVue Capital cut the largest investment of all the hedgies watched by Insider Monkey, worth about $1.1 million in stock. Frederick DiSanto's fund, Ancora Advisors, also dumped its stock, about $0.3 million worth. These moves are important to note, as aggregate hedge fund interest was cut by 4 funds last quarter.
Let's now review hedge fund activity in other stocks similar to Natural Gas Services Group, Inc. (NYSE:NGS). These stocks are Goodrich Petroleum Corporation (NYSE:GDP), Siebert Financial Corp. (NASDAQ:SIEB), IEC Electronics Corp. (NASDAQ:IEC), Aptevo Therapeutics Inc. (NASDAQ:APVO), TRACON Pharmaceuticals Inc (NASDAQ:TCON), Salisbury Bancorp, Inc. (NASDAQ:SAL), and inTEST Corporation (NYSE:INTT). All of these stocks' market caps are similar to NGS's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position GDP,5,21407,-3 SIEB,3,831,2 IEC,1,4081,-1 APVO,8,68540,-1 TCON,6,48141,-2 SAL,1,640,1 INTT,4,17935,1 Average,4,23082,-0.4 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 4 hedge funds with bullish positions and the average amount invested in these stocks was $23 million. That figure was $20 million in NGS's case. Aptevo Therapeutics Inc. (NASDAQ:APVO) is the most popular stock in this table. On the other hand IEC Electronics Corp. (NASDAQ:IEC) is the least popular one with only 1 bullish hedge fund positions. Natural Gas Services Group, Inc. (NYSE:NGS) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for NGS is 51.7. Stocks with higher number of hedge fund positions relative to other stocks as well as relative to their historical range receive a higher sentiment score. Our calculations showed that top 5 most popular stocks among hedge funds returned 95.8% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 40 percentage points. These stocks gained 19.3% in 2021 through June 25th and still beat the market by 4.8 percentage points. Hedge funds were also right about betting on NGS as the stock returned 14.2% since the end of Q1 (through 6/25) and outperformed the market. Hedge funds were rewarded for their relative bullishness.
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Disclosure: None. This article was originally published at Insider Monkey.