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Hedge Funds Are Nibbling On Cactus, Inc. (WHD)

·6 min read

The latest 13F reporting period has come and gone, and Insider Monkey is again at the forefront when it comes to making use of this gold mine of data. We have processed the filings of the more than 866 world-class investment firms that we track and now have access to the collective wisdom contained in these filings, which are based on their March 31st holdings, data that is available nowhere else. Should you consider Cactus, Inc. (NYSE:WHD) for your portfolio? We'll look to this invaluable collective wisdom for the answer.

Is Cactus, Inc. (NYSE:WHD) worth your attention right now? The best stock pickers were betting on the stock. The number of long hedge fund positions increased by 1 recently. Cactus, Inc. (NYSE:WHD) was in 20 hedge funds' portfolios at the end of March. The all time high for this statistic is 27. Our calculations also showed that WHD isn't among the 30 most popular stocks among hedge funds (click for Q1 rankings). There were 19 hedge funds in our database with WHD positions at the end of the fourth quarter.

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.

Zilvinas Zach Mecelis Covalis Capital
Zilvinas Zach Mecelis Covalis Capital

Zilvinas Mecelis of Covalis Capital

At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, pet market is growing at a 7% annual rate and is expected to reach $110 billion in 2021. So, we are checking out the 5 best stocks for animal lovers. We go through lists like the 15 best Jim Cramer stocks to identify the next Tesla that will deliver outsized returns. 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. Now let's go over the key hedge fund action encompassing Cactus, Inc. (NYSE:WHD).

Do Hedge Funds Think WHD Is A Good Stock To Buy Now?

At Q1's end, a total of 20 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 5% from the fourth quarter of 2020. On the other hand, there were a total of 18 hedge funds with a bullish position in WHD a year ago. With hedge funds' sentiment swirling, there exists a select group of key hedge fund managers who were adding to their stakes meaningfully (or already accumulated large positions).

Of the funds tracked by Insider Monkey, Encompass Capital Advisors, managed by Todd J. Kantor, holds the biggest position in Cactus, Inc. (NYSE:WHD). Encompass Capital Advisors has a $38.3 million position in the stock, comprising 3% of its 13F portfolio. The second most bullish fund manager is Adage Capital Management, led by Phill Gross and Robert Atchinson, holding a $20.3 million position; less than 0.1%% of its 13F portfolio is allocated to the stock. Some other hedge funds and institutional investors that hold long positions include Richard Driehaus's Driehaus Capital, Chuck Royce's Royce & Associates and Israel Englander's Millennium Management. In terms of the portfolio weights assigned to each position Encompass Capital Advisors allocated the biggest weight to Cactus, Inc. (NYSE:WHD), around 3% of its 13F portfolio. Pinz Capital is also relatively very bullish on the stock, earmarking 1.48 percent of its 13F equity portfolio to WHD.

Consequently, some big names were breaking ground themselves. Royce & Associates, managed by Chuck Royce, assembled the biggest position in Cactus, Inc. (NYSE:WHD). Royce & Associates had $12.6 million invested in the company at the end of the quarter. Matthew L Pinz's Pinz Capital also made a $5.6 million investment in the stock during the quarter. The other funds with new positions in the stock are Ben Levine, Andrew Manuel and Stefan Renold's LMR Partners, Zilvinas Mecelis's Covalis Capital, and Frank Fu's CaaS Capital.

Let's now take a look at hedge fund activity in other stocks - not necessarily in the same industry as Cactus, Inc. (NYSE:WHD) but similarly valued. These stocks are NIC Inc. (NASDAQ:EGOV), Welbilt, Inc. (NYSE:WBT), Phreesia, Inc. (NYSE:PHR), PQ Group Holdings Inc. (NYSE:PQG), Global Blue Group Holding AG (NYSE:GB), Dave & Buster's Entertainment, Inc. (NASDAQ:PLAY), and Xperi Holding Corporation (NASDAQ:XPER). This group of stocks' market caps match WHD's market cap.

[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position EGOV,34,346790,19 WBT,28,400427,3 PHR,27,213201,1 PQG,8,32900,-1 GB,16,1810814,1 PLAY,24,540055,3 XPER,21,155873,-1 Average,22.6,500009,3.6 [/table]

View table here if you experience formatting issues.

As you can see these stocks had an average of 22.6 hedge funds with bullish positions and the average amount invested in these stocks was $500 million. That figure was $136 million in WHD's case. NIC Inc. (NASDAQ:EGOV) is the most popular stock in this table. On the other hand PQ Group Holdings Inc. (NYSE:PQG) is the least popular one with only 8 bullish hedge fund positions. Cactus, Inc. (NYSE:WHD) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for WHD is 51.3. 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 23.8% in 2021 through July 16th and beat the market by 7.7 percentage points. A small number of hedge funds were also right about betting on WHD, though not to the same extent, as the stock returned 17.6% since the end of Q1 (through July 16th) and outperformed the market.

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Disclosure: None. This article was originally published at Insider Monkey.