Is Superior Energy Services, Inc. (NYSE:SPN) a good investment right now? We check hedge fund and billionaire investor sentiment before delving into hours of research. Hedge funds spend millions of dollars on Ivy League graduates, expert networks, and get tips from investment bankers and industry insiders. Sure they sometimes fail miserably, but their consensus stock picks historically outperformed the market after adjusting for known risk factors.
Is Superior Energy Services, Inc. (NYSE:SPN) a buy here? The smart money is becoming hopeful. The number of long hedge fund bets inched up by 5 lately. Our calculations also showed that SPN isn't among the 30 most popular stocks among hedge funds. SPN was in 25 hedge funds' portfolios at the end of March. There were 20 hedge funds in our database with SPN positions at the end of the previous quarter.
To the average investor there are plenty of signals stock market investors employ to appraise stocks. A pair of the most underrated signals are hedge fund and insider trading interest. Our researchers have shown that, historically, those who follow the top picks of the top fund managers can outclass their index-focused peers by a very impressive amount (see the details here).
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Paul Marshall of Marshall Wace[/caption]
We're going to view the key hedge fund action regarding Superior Energy Services, Inc. (NYSE:SPN).
How have hedgies been trading Superior Energy Services, Inc. (NYSE:SPN)?
At the end of the first quarter, a total of 25 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 25% from the previous quarter. On the other hand, there were a total of 24 hedge funds with a bullish position in SPN a year ago. With hedge funds' positions undergoing their usual ebb and flow, there exists a select group of notable hedge fund managers who were upping their holdings substantially (or already accumulated large positions).
Among these funds, D E Shaw held the most valuable stake in Superior Energy Services, Inc. (NYSE:SPN), which was worth $24.8 million at the end of the first quarter. On the second spot was Fine Capital Partners which amassed $19.3 million worth of shares. Moreover, AQR Capital Management, HBK Investments, and Renaissance Technologies were also bullish on Superior Energy Services, Inc. (NYSE:SPN), allocating a large percentage of their portfolios to this stock.
Consequently, key hedge funds have been driving this bullishness. Renaissance Technologies, managed by Jim Simons, created the most valuable position in Superior Energy Services, Inc. (NYSE:SPN). Renaissance Technologies had $7.1 million invested in the company at the end of the quarter. Thiru Ramakrishnan's TVR Capital also made a $6.3 million investment in the stock during the quarter. The other funds with brand new SPN positions are Peter Rathjens, Bruce Clarke and John Campbell's Arrowstreet Capital, Paul Marshall and Ian Wace's Marshall Wace LLP, and Joel Greenblatt's Gotham Asset Management.
Let's check out hedge fund activity in other stocks similar to Superior Energy Services, Inc. (NYSE:SPN). These stocks are Heidrick & Struggles International, Inc. (NASDAQ:HSII), Entercom Communications Corp. (NYSE:ETM), Dermira Inc (NASDAQ:DERM), and Century Communities, Inc (NYSE:CCS). This group of stocks' market valuations are closest to SPN's market valuation.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position HSII,18,131951,-4 ETM,21,95501,5 DERM,24,202565,8 CCS,16,197409,1 Average,19.75,156857,2.5 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 19.75 hedge funds with bullish positions and the average amount invested in these stocks was $157 million. That figure was $113 million in SPN's case. Dermira Inc (NASDAQ:DERM) is the most popular stock in this table. On the other hand Century Communities, Inc (NYSE:CCS) is the least popular one with only 16 bullish hedge fund positions. Compared to these stocks Superior Energy Services, Inc. (NYSE:SPN) is more popular among hedge funds. Our calculations showed that top 20 most popular stocks among hedge funds returned 1.9% in Q2 through May 30th and outperformed the S&P 500 ETF (SPY) by more than 3 percentage points. Unfortunately SPN wasn't nearly as popular as these 20 stocks and hedge funds that were betting on SPN were disappointed as the stock returned -63.8% during the same period and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 20 most popular stocks among hedge funds as 13 of these stocks already outperformed the market in Q2.
Disclosure: None. This article was originally published at Insider Monkey.
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