Is Dril-Quip, Inc. (NYSE:DRQ) a healthy stock for your portfolio? Money managers are turning less bullish. The number of long hedge fund bets went down by 1 recently.
According to most traders, hedge funds are viewed as unimportant, old financial vehicles of the past. While there are greater than 8000 funds trading today, we at Insider Monkey look at the elite of this club, about 450 funds. It is estimated that this group controls the majority of the hedge fund industry’s total asset base, and by keeping an eye on their highest performing equity investments, we have uncovered a few investment strategies that have historically outperformed the S&P 500 index. Our small-cap hedge fund strategy outperformed the S&P 500 index by 18 percentage points a year for a decade in our back tests, and since we’ve started sharing our picks with our subscribers at the end of August 2012, we have trumped the S&P 500 index by 24 percentage points in 7 months (see all of our picks from August).
Equally as integral, positive insider trading sentiment is another way to break down the stock market universe. Just as you’d expect, there are plenty of reasons for an insider to sell shares of his or her company, but only one, very simple reason why they would behave bullishly. Several empirical studies have demonstrated the market-beating potential of this method if piggybackers know what to do (learn more here).
Now, it’s important to take a gander at the key action encompassing Dril-Quip, Inc. (NYSE:DRQ).
What does the smart money think about Dril-Quip, Inc. (NYSE:DRQ)?
Heading into 2013, a total of 8 of the hedge funds we track were bullish in this stock, a change of -11% from the third quarter. With hedgies’ sentiment swirling, there exists a few notable hedge fund managers who were upping their holdings substantially.
When looking at the hedgies we track, Ken Fisher’s Fisher Asset Management had the most valuable position in Dril-Quip, Inc. (NYSE:DRQ), worth close to $28.2 million, accounting for 0.1% of its total 13F portfolio. The second largest stake is held by Vinik Asset Management, managed by Jeffrey Vinik, which held a $22.3 million position; 0.7% of its 13F portfolio is allocated to the stock. Other hedge funds that are bullish include Israel Englander’s Millennium Management, Ken Griffin’s Citadel Investment Group and D. E. Shaw’s D E Shaw.
Due to the fact that Dril-Quip, Inc. (NYSE:DRQ) has witnessed declining sentiment from the smart money, logic holds that there exists a select few hedgies that slashed their positions entirely heading into 2013. It’s worth mentioning that Cliff Asness’s AQR Capital Management dropped the biggest stake of all the hedgies we watch, totaling an estimated $0.5 million in stock., and Paul Tudor Jones of Tudor Investment Corp was right behind this move, as the fund sold off about $0.5 million worth. These bearish behaviors are interesting, as total hedge fund interest was cut by 1 funds heading into 2013.
What do corporate executives and insiders think about Dril-Quip, Inc. (NYSE:DRQ)?
Insider purchases made by high-level executives is most useful when the company we’re looking at has seen transactions within the past 180 days. Over the last 180-day time period, Dril-Quip, Inc. (NYSE:DRQ) has seen zero unique insiders purchasing, and 4 insider sales (see the details of insider trades here).
Let’s go over hedge fund and insider activity in other stocks similar to Dril-Quip, Inc. (NYSE:DRQ). These stocks are Forum Energy Technologies Inc (NYSE:FET), MDU Resources Group Inc (NYSE:MDU), Oil States International, Inc. (NYSE:OIS), Superior Energy Services, Inc. (NYSE:SPN), and RPC, Inc. (NYSE:RES). This group of stocks are the members of the oil & gas equipment & services industry and their market caps match DRQ’s market cap.
| Company Name | # of Hedge Funds | # of Insiders Buying | # of Insiders Selling |
| Forum Energy Technologies Inc (NYSE:FET) | 6 | 0 | 9 |
| MDU Resources Group Inc (NYSE:MDU) | 8 | 1 | 1 |
| Oil States International, Inc. (NYSE:OIS) | 17 | 1 | 2 |
| Superior Energy Services, Inc. (NYSE:SPN) | 14 | 1 | 2 |
| RPC, Inc. (NYSE:RES) | 9 | 0 | 0 |
With the returns demonstrated by our tactics, everyday investors should always monitor hedge fund and insider trading activity, and Dril-Quip, Inc. (NYSE:DRQ) is an important part of this process.
