As we already know from media reports and hedge
fund investor letters, many hedge funds lost money in fourth
quarter, blaming macroeconomic conditions and unpredictable events
that hit several sectors, with technology among them. Nevertheless,
most investors decided to stick to their bullish theses and their
long-term focus allows us to profit from the recent declines. In
particular, letâs take a look at what hedge funds think about Nine
Energy Service, Inc. (NYSE:NINE) in this
Is Nine Energy Service, Inc.
(NYSE:NINE) a good stock
to buy now? Investors who are in the know are getting more bullish.
The number of bullish hedge fund bets went up by 3 lately. Our
calculations also showed that NINE isn't among the 30 most popular stocks
among hedge funds. NINE was in 10 hedge funds'
portfolios at the end of December. There were 7 hedge funds in our
database with NINE positions at the end of the previous
If you'd ask most investors, hedge funds are
assumed to be unimportant, old investment vehicles of yesteryear.
While there are more than 8000 funds in operation today, We look at
the leaders of this club, around 750 funds. Most estimates
calculate that this group of people orchestrate the lion's share of
the smart money's total capital, and by keeping an eye on their
inimitable equity investments, Insider Monkey has come up with a
few investment strategies that have historically exceeded Mr.
Market. Insider Monkey's flagship hedge fund strategy exceeded the
S&P 500 index by nearly 5 percentage points per annum since its
inception in May 2014 through early November 2018. We were able to
generate large returns even by identifying short candidates. Our
portfolio of short stocks lost 27.5% since February 2017 (through
March 12th) even though the market was up nearly 25% during
the same period. We just shared a list of 6 short targets in
our latest quarterly update and
they are already down an average of 6% in less than a month.
Let's check out the recent hedge fund action
regarding Nine Energy Service, Inc. (NYSE:NINE).
Heading into the first quarter of 2019, a total
of 10 of the hedge funds tracked by Insider Monkey held long
positions in this stock, a change of 43% from one quarter earlier.
The graph below displays the number of hedge funds with bullish
position in NINE over the last 14 quarters. With hedgies' capital
changing hands, there exists a select group of key hedge fund
managers who were upping their stakes meaningfully (or already
accumulated large positions).
Among these funds, Adage Capital
Management held the most valuable stake in Nine Energy Service,
Inc. (NYSE:NINE), which was worth $20 million at the end of the
fourth quarter. On the second spot was Encompass Capital Advisors
which amassed $13.6 million worth of shares. Moreover, D E Shaw,
Proxima Capital Management, and Marshall Wace LLP were also bullish
on Nine Energy Service, Inc. (NYSE:NINE), allocating a large
percentage of their portfolios to this stock.
Consequently, some big names were breaking ground
themselves. Marshall Wace LLP,
managed by Paul Marshall and Ian Wace, created the most valuable
position in Nine Energy Service, Inc. (NYSE:NINE). Marshall Wace
LLP had $1 million invested in the company at the end of the
quarter. Ken Griffin's Citadel Investment
Group also initiated a $0.2 million position during the
quarter. The other funds with brand new NINE positions are Israel
Englander's Millennium Management,
David Costen Haley's HBK Investments, and
Mike Vranos's Ellington.
Let's check out hedge fund activity in other
stocks similar to Nine Energy Service, Inc. (NYSE:NINE). We will
take a look at SMART Global Holdings, Inc. (NASDAQ:SGH), Apollo Medical
Holdings, Inc. (NASDAQ:AMEH), Seacor Holdings,
Inc. (NYSE:CKH), and Banc of
California, Inc. (NYSE:BANC). This group of
stocks' market values resemble NINE's market value.
[table] Ticker, No of HFs with positions, Total
Value of HF Positions (x1000), Change in HF Position
SGH,14,374016,2 AMEH,3,2024,-1 CKH,16,113538,-3 BANC,17,92607,2
View table here if
you experience formatting issues.
As you can see these stocks had an average of
12.5 hedge funds with bullish positions and the average amount
invested in these stocks was $146 million. That figure was $39
million in NINE's case. Banc of California, Inc. (NYSE:BANC) is the most
popular stock in this table. On the other hand Apollo Medical
Holdings, Inc. (NASDAQ:AMEH) is the least popular
one with only 3 bullish hedge fund positions. Nine Energy Service,
Inc. (NYSE:NINE) is not the least popular stock in this group but
hedge fund interest is still below average. This is a slightly
negative signal and we'd rather spend our time researching stocks
that hedge funds are piling on. Our calculations showed that
top 15 most popular
stocks) among hedge funds returned 24.2% through April 22nd and
outperformed the S&P 500 ETF (SPY) by more than 7 percentage
points. Unfortunately NINE wasn't nearly as popular as these 15
stock (hedge fund sentiment was quite bearish); NINE investors were
disappointed as the stock returned -2.4% and underperformed the
market. If you are interested in investing in large cap stocks with
huge upside potential, you should check out the top 15 most popular
stocks) among hedge funds as 13 of these stocks already
outperformed the market this year.
Disclosure: None. This article was originally
published at Insider Monkey.