Insider Monkey has processed numerous 13F filings of hedge funds and successful value investors to create an extensive database of hedge fund holdings. The 13F filings show the hedge funds' and successful investors' positions as of the end of the first quarter. You can find articles about an individual hedge fund's trades on numerous financial news websites. However, in this article we will take a look at their collective moves over the last 4.5 years and analyze what the smart money thinks of Nine Energy Service, Inc. (NYSE:NINE) based on that data.
Nine Energy Service, Inc. (NYSE:NINE) shareholders have witnessed a decrease in activity from the world's largest hedge funds lately. Our calculations also showed that NINE isn't among the 30 most popular stocks among hedge funds (click for Q1 rankings and see the video for a quick look at the top 5 stocks). Video: Watch our video about the top 5 most popular hedge fund stocks.
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. 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 51 percentage points since March 2017 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that'll significantly underperform the market. We have been tracking and sharing the list of these stocks since February 2017 and they lost 36% through May 18th. That's why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
[caption id="attachment_728717" align="aligncenter" width="400"] Roger Ibbotson of Zebra Capital Management[/caption]
At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, 2020's unprecedented market conditions provide us with the highest number of trading opportunities in a decade. So we are checking out stocks recommended/scorned by legendary Bill Miller. We interview hedge fund managers and ask them about their best ideas. If you want to find out the best healthcare stock to buy right now, you can watch our latest hedge fund manager interview here. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. Our best call in 2020 was shorting the market when the S&P 500 was trading at 3150 after realizing the coronavirus pandemic’s significance before most investors. Keeping this in mind let's take a look at the recent hedge fund action surrounding Nine Energy Service, Inc. (NYSE:NINE).
How are hedge funds trading Nine Energy Service, Inc. (NYSE:NINE)?
At the end of the first quarter, a total of 5 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -17% from one quarter earlier. On the other hand, there were a total of 10 hedge funds with a bullish position in NINE a year ago. So, let's check out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
When looking at the institutional investors followed by Insider Monkey, Adage Capital Management, managed by Phill Gross and Robert Atchinson, holds the most valuable position in Nine Energy Service, Inc. (NYSE:NINE). Adage Capital Management has a $1.6 million position in the stock, comprising less than 0.1%% of its 13F portfolio. Coming in second is Thomas G. Maheras of Tegean Capital Management, with a $0.2 million position; the fund has 0.7% of its 13F portfolio invested in the stock. Remaining professional money managers with similar optimism include Youlia Miteva's Proxima Capital Management, Renaissance Technologies and Roger Ibbotson's Zebra Capital Management. In terms of the portfolio weights assigned to each position Proxima Capital Management allocated the biggest weight to Nine Energy Service, Inc. (NYSE:NINE), around 1.2% of its 13F portfolio. Tegean Capital Management is also relatively very bullish on the stock, earmarking 0.73 percent of its 13F equity portfolio to NINE.
Since Nine Energy Service, Inc. (NYSE:NINE) has experienced bearish sentiment from the smart money, it's easy to see that there lies a certain "tier" of money managers that slashed their full holdings last quarter. Interestingly, Todd J. Kantor's Encompass Capital Advisors dropped the biggest stake of all the hedgies watched by Insider Monkey, totaling close to $9.3 million in stock, and Dmitry Balyasny's Balyasny Asset Management was right behind this move, as the fund dumped about $1.6 million worth. These bearish behaviors are intriguing to say the least, as aggregate hedge fund interest fell by 1 funds last quarter.
Let's now take a look at hedge fund activity in other stocks - not necessarily in the same industry as Nine Energy Service, Inc. (NYSE:NINE) but similarly valued. We will take a look at Biocept, Inc. (NASDAQ:BIOC), One Stop Systems, Inc. (NASDAQ:OSS), J. Jill, Inc. (NYSE:JILL), and Willamette Valley Vineyards, Inc. (NASDAQ:WVVI). All of these stocks' market caps resemble NINE's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position BIOC,2,495,1 OSS,1,85,0 JILL,4,528,-1 WVVI,1,491,0 Average,2,400,0 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 2 hedge funds with bullish positions and the average amount invested in these stocks was $0 million. That figure was $2 million in NINE's case. J. Jill, Inc. (NYSE:JILL) is the most popular stock in this table. On the other hand One Stop Systems, Inc. (NASDAQ:OSS) is the least popular one with only 1 bullish hedge fund positions. Compared to these stocks Nine Energy Service, Inc. (NYSE:NINE) is more popular among hedge funds. Our calculations showed that top 10 most popular stocks among hedge funds returned 41.4% in 2019 and outperformed the S&P 500 ETF (SPY) by 10.1 percentage points. These stocks returned 8.3% in 2020 through the end of May but still managed to beat the market by 13.2 percentage points. Hedge funds were also right about betting on NINE as the stock returned 151.2% so far in Q2 (through the end of May) and outperformed the market by an even larger margin. Hedge funds were clearly right about piling into this stock relative to other stocks with similar market capitalizations.
Disclosure: None. This article was originally published at Insider Monkey.