Should You Avoid North Atlantic Drilling Ltd. (NADL)?

Due to the fact that North Atlantic Drilling Ltd. (NYSE:NADL) has experienced a falling interest from hedge fund managers, we can see that there were a few hedge funds that slashed their full holdings heading into Q4. Interestingly, Israel Englander’s Millennium Management cut the biggest position of the “upper crust” of funds watched by Insider Monkey, comprising an estimated $1 million in call options., and Matthew Hulsizer’s PEAK6 Capital Management was right behind this move, as the fund sold off about $30,000 worth. These moves are interesting, as aggregate hedge fund interest dropped by 1 fund heading into Q4.

Let’s check out hedge fund activity in other stocks – not necessarily in the same industry as North Atlantic Drilling Ltd. (NYSE:NADL) but similarly valued. We will take a look at New America High Income Fund Inc. (NYSE:HYB), Cutera, Inc. (NASDAQ:CUTR), Garnero Group Acquisition Co (NASDAQ:GGAC), and Clearfield, Inc. (NASDAQ:CLFD). This group of stocks’ market values match North Atlantic Drilling Ltd. (NYSE:NADL)’s market value.

As you can see, these stocks had an average of 8 hedge funds with bullish positions and the average amount invested in these stocks was $21 million. That figure was $5 million in North Atlantic Drilling Ltd. (NYSE:NADL)’s case. Cutera, Inc. (NASDAQ:CUTR) is the most popular stock in this table. On the other hand, New America High Income Fund Inc. (NYSE:HYB) is the least popular one with only 4 bullish hedge fund positions. Compared to these stocks, North Atlantic Drilling Ltd. (NYSE:NADL) is even less popular than New America High Income Fund Inc. (NYSE:HYB). Considering that hedge funds aren’t fond of this stock in relation to other companies analyzed in this article, it may be a good idea to analyze it in detail and understand why the smart money isn’t behind this stock. This isn’t necessarily bad news. Although it is possible that hedge funds may think the stock is overpriced and view the stock as a short candidate, they may not be very familiar with the bullish thesis. In either case, more research is warranted.