Should You Buy Dril-Quip, Inc. (DRQ)?

Seeing as Dril-Quip, Inc. (NYSE:DRQ) has witnessed bearish sentiment from the aggregate hedge fund industry, it’s safe to say that there were a few hedge funds who were dropping their full holdings by the end of the third quarter. Interestingly, Jim Simons’s Renaissance Technologies sold off the biggest investment of the “upper crust” of funds monitored by Insider Monkey, valued at close to $21.4 million in stock, and Clint Murray’s Lodge Hill Capital was right behind this move, as the fund cut about $7.9 million worth. These moves are interesting, as aggregate hedge fund interest stayed the same (this is a bearish signal in our experience).

Let’s now review hedge fund activity in other stocks – not necessarily in the same industry as Dril-Quip, Inc. (NYSE:DRQ) but similarly valued. We will take a look at Companhia Paranaense de Energia (ADR) (NYSE:ELP), Portola Pharmaceuticals Inc (NASDAQ:PTLA), CONSOL Energy Inc. (NYSE:CNX), and Cooper Tire & Rubber Company (NYSE:CTB). This group of stocks’ market values match DRQ’s market value.

As you can see these stocks had an average of 20 hedge funds with bullish positions and the average amount invested in these stocks was $430 million, versus $96 million in DRQ’s case. Portola Pharmaceuticals Inc (NASDAQ:PTLA) is the most popular stock in this table, while Companhia Paranaense de Energia (ADR) (NYSE:ELP) is the least popular one with only 5 bullish hedge fund positions. Dril-Quip, Inc. (NYSE:DRQ) 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. In this regard PTLA might be a better candidate to consider a long position.