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Hedge Funds Are Buying Patterson-UTI Energy, Inc. (PTEN)

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Patterson-UTI Energy, Inc. (NASDAQ:PTEN) was in 16 hedge funds’ portfolio at the end of the first quarter of 2013. PTEN shareholders have witnessed an increase in support from the world’s most elite money managers of late. There were 11 hedge funds in our database with PTEN positions at the end of the previous quarter.

To most shareholders, hedge funds are seen as worthless, outdated financial tools of years past. While there are over 8000 funds with their doors open today, we look at the crème de la crème of this club, about 450 funds. It is estimated that this group oversees most of all hedge funds’ total capital, and by tracking their best equity investments, we have uncovered a few investment strategies that have historically beaten the S&P 500 index. Our small-cap hedge fund strategy outpaced the S&P 500 index by 18 percentage points annually for a decade in our back tests, and since we’ve began to sharing our picks with our subscribers at the end of August 2012, we have beaten the S&P 500 index by 23.3 percentage points in 8 months (see all of our picks from August).

Just as key, optimistic insider trading activity is another way to break down the stock market universe. Just as you’d expect, there are lots of stimuli for an executive to downsize shares of his or her company, but just one, very obvious reason why they would behave bullishly. Several academic studies have demonstrated the market-beating potential of this tactic if piggybackers know where to look (learn more here).

With these “truths” under our belt, let’s take a look at the key action surrounding Patterson-UTI Energy, Inc. (NASDAQ:PTEN).

How are hedge funds trading Patterson-UTI Energy, Inc. (NASDAQ:PTEN)?

At the end of the first quarter, a total of 16 of the hedge funds we track were bullish in this stock, a change of 45% from one quarter earlier. With hedge funds’ sentiment swirling, there exists an “upper tier” of noteworthy hedge fund managers who were increasing their stakes considerably.

Patterson-UTI Energy, Inc. (NASDAQ:PTEN)Of the funds we track, Citadel Investment Group, managed by Ken Griffin, holds the biggest position in Patterson-UTI Energy, Inc. (NASDAQ:PTEN). Citadel Investment Group has a $57 million position in the stock, comprising 0.1% of its 13F portfolio. The second largest stake is held by Kahn Brothers, managed by Irving Kahn, which held a $46 million position; the fund has 6.8% of its 13F portfolio invested in the stock. Other peers that are bullish include Robert Rodriguez and Steven Romick’s First Pacific Advisors LLC, D. E. Shaw’s D E Shaw and Chuck Royce’s Royce & Associates.

As industrywide interest jumped, specific money managers were breaking ground themselves. First Pacific Advisors LLC, managed by Robert Rodriguez and Steven Romick, assembled the biggest position in Patterson-UTI Energy, Inc. (NASDAQ:PTEN). First Pacific Advisors LLC had 44.1 million invested in the company at the end of the quarter. Ray Dalio’s Bridgewater Associates also initiated a $3.9 million position during the quarter. The other funds with new positions in the stock are Matthew Tewksbury’s Stevens Capital Management, David Costen Haley’s HBK Investments, and Paul Tudor Jones’s Tudor Investment Corp.

How have insiders been trading Patterson-UTI Energy, Inc. (NASDAQ:PTEN)?

Insider purchases made by high-level executives is particularly usable when the company in question has experienced transactions within the past 180 days. Over the last half-year time period, Patterson-UTI Energy, Inc. (NASDAQ:PTEN) has seen zero unique insiders purchasing, and 1 insider sales (see the details of insider trades here).

Let’s also take a look at hedge fund and insider activity in other stocks similar to Patterson-UTI Energy, Inc. (NASDAQ:PTEN). These stocks are Pengrowth Energy Corp (USA) (NYSE:PGH), Rowan Companies PLC (NYSE:RDC), Halcon Resources Corp (NYSE:HK), Enerplus Corp (USA) (NYSE:ERF), and Atwood Oceanics, Inc. (NYSE:ATW). This group of stocks belong to the oil & gas drilling & exploration industry and their market caps resemble PTEN’s market cap.

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