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Natural Gas Services (NGS) Has Fallen 24% in Last One Year, Underperforms Market

Alex Smith
·4 mins read

If you are looking for the best ideas for your portfolio you may want to consider some of Palm Valley Capital Management's top stock picks. Palm Valley Capital, an investment management firm, is bullish on Natural Gas Services Group Inc (NYSE:NGS) stock. In its Q2 2019 investor letter – you can download a copy here – the firm discussed its investment thesis on Natural Gas Services Group Inc (NYSE:NGS) stock. Natural Gas Services Group Inc (NYSE:NGS) is a leading provider of gas compression services and equipment to the energy industry.

On July 1, 2019, Palm Valley Capital had released its Q2 2019 investor letter. The investment firm said that Natural Gas Services Group Inc (NYSE:NGS) was one of the ten equities that the fund held in Q2 2019. The stock has posted a return of -24.3% in the trailing one year period, underperforming fund's benchmark the S&P Small Cap 600 Index which returned -2.2% in the same period. This suggests that the investment firm was wrong in its decision. On a year-to-date basis, Natural Gas Services Group Inc (NYSE:NGS) stock has fallen by 33.7%.

Last month, we published an article revealing Palm Valley Capital's bullish investment thesis on Natural Gas Services Group Inc (NYSE:NGS) stock in its Q2 2020 investor letter. This suggests that the investment firm has been bullish for a long time on Natural Gas Services Group Inc (NYSE:NGS).

Palm Valley Capital fund posted a return of 0.7% from April 30, 2019 through June 30, 2019, outperforming fund's benchmark the S&P Small Cap 600 Index which returned -1.9% in the same period. Let’s take a look at comments made by Palm Valley Capital about Natural Gas Services Group Inc (NYSE:NGS) in the Q2 2019 investor letter.

"Natural Gas Services Group manufactures, sells, and leases natural gas compressors to the energy industry. Compressors are commonly used to increase the productivity of oil and natural gas wells. In our opinion, Natural Gas Services has navigated through the ups and downs of the energy markets well. During profitable years, the company has positioned the business for future opportunity by allowing its cash balance to grow. During periods of industry weakness, the company has invested in new equipment to grow revenues and increase market share. Natural Gas Services maintains a very strong balance sheet with no debt and $40 million in cash. We believe its stock is attractively priced relative to its net assets, and it currently trades at 0.80x tangible book value."

In Q1 2020, the number of bullish hedge fund positions on Natural Gas Services Group Inc (NYSE:NGS) stock increased by about 11% from the previous quarter (see the chart here), so a number of other hedge fund managers seem to agree with Natural Gas Services' growth potential. Our calculations showed that Natural Gas Services Group Inc (NYSE:NGS) isn't ranked among the 30 most popular stocks among hedge funds.

The top 10 stocks among hedge funds returned 185% since the end of 2014 and outperformed the S&P 500 Index ETFs by more than 109 percentage points. We know it sounds unbelievable. You have been dismissing our articles about top hedge fund stocks mostly because you were fed biased information by other media outlets about hedge funds' poor performance. You could have doubled the size of your nest egg by investing in the top hedge fund stocks instead of dumb S&P 500 ETFs. Below you can watch our video about the top 5 hedge fund stocks right now. All of these stocks had positive returns in 2020.

Video: Top 5 Stocks Among Hedge Funds

At Insider Monkey we scour multiple sources to uncover the next great investment idea. We go through lists like the 10 most profitable companies in America to pick the best large-cap stocks to buy. 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. If you want to find out the best healthcare stock to buy right now, you can watch our latest hedge fund manager interview here. You can subscribe to our free enewsletter below to receive our stories in your inbox:

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