The government requires hedge funds and wealthy investors with over a certain portfolio size to file a report that shows their positions at the end of every quarter. Even though it isn’t the intention, these filings level the playing field for ordinary investors. The latest round of 13F filings discloses the funds’ positions on September 30. We at Insider Monkey have made an extensive database of more than 700 of those elite funds and prominent investors’ filings. In this article, we analyze how these elite funds and prominent investors traded Forbes Energy Services Ltd. (NASDAQ:FES) based on those filings.
Forbes Energy Services Ltd. (NASDAQ:FES) shareholders have witnessed a decrease in enthusiasm from smart money lately. FES was in 4 hedge funds’ portfolios at the end of the third quarter of 2015. There were 5 hedge funds in our database with FES positions at the end of the previous quarter. At the end of this article we will also compare FES to other stocks including MELA Sciences Inc (NASDAQ:MELA), Wave Systems Corp. (NASDAQ:WAVX), and Essex Rental Corp. (NASDAQ:ESSX) to get a better sense of its popularity.
Follow Forbes Energy Services Ltd. (NASDAQ:FLSS)
Follow Forbes Energy Services Ltd. (NASDAQ:FLSS)
According to most market participants, hedge funds are assumed to be unimportant, old investment vehicles of yesteryear. While there are more than 8,000 funds trading at the moment, Our researchers look at the upper echelon of this group, around 700 funds. These investment experts administer the lion’s share of the smart money’s total asset base, and by observing their finest picks, Insider Monkey has discovered a number of investment strategies that have historically surpassed the S&P 500 index. Insider Monkey’s small-cap hedge fund strategy exceeded the S&P 500 index by 12 percentage points per annum for a decade in their back tests.
Keeping this in mind, we’re going to check out the fresh action regarding Forbes Energy Services Ltd. (NASDAQ:FES).
What have hedge funds been doing with Forbes Energy Services Ltd. (NASDAQ:FES)?
At the end of the third quarter, a total of 4 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -20% from the second quarter. With hedge funds’ positions undergoing their usual ebb and flow, there exists an “upper tier” of notable hedge fund managers who were increasing their holdings significantly (or already accumulated large positions).
When looking at the institutional investors followed by Insider Monkey, Steel Partners, managed by Warren Lichtenstein, holds the biggest position in Forbes Energy Services Ltd. (NASDAQ:FES). Steel Partners has a $1.9 million position in the stock, comprising 0.3% of its 13F portfolio. Sitting at the No. 2 spot is Richard C. Patton of Courage Capital, with a $0.2 million position; the fund has 0.1% of its 13F portfolio invested in the stock. Remaining professional money managers that hold long positions contain Jim Simons’s Renaissance Technologies, and David Steinberg’s MAST Capital.
We view hedge fund activity in the stock unfavorable, but in this case there was only a single hedge fund selling its entire position: Citadel Investment Group. One hedge fund selling its entire position doesn’t always imply a bearish intent. Theoretically a hedge fund may decide to sell a promising position in order to invest the proceeds in a more promising idea. However, we don’t think this is the case in this case because none of the 700+ hedge funds tracked by Insider Monkey identified FES as a viable investment and initiated a position in the stock.
Let’s check out hedge fund activity in other stocks – not necessarily in the same industry as Forbes Energy Services Ltd. (NASDAQ:FES) but similarly valued. We will take a look at MELA Sciences Inc (NASDAQ:MELA), Wave Systems Corp. (NASDAQ:WAVX), Essex Rental Corp. (NASDAQ:ESSX), and Hooper Holmes, Inc. (NYSEMKT:HH). This group of stocks’ market values match FES’s market value.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| MELA | 4 | 2223 | -1 |
| WAVX | 4 | 131 | 2 |
| ESSX | 5 | 453 | -1 |
| HH | 5 | 1378 | 1 |
As you can see these stocks had an average of 4.5 hedge funds with bullish positions and the average amount invested in these stocks was $1 million. That figure was $2 million in FES’s case. Essex Rental Corp. (NASDAQ:ESSX) is the most popular stock in this table. On the other hand MELA Sciences Inc (NASDAQ:MELA) is the least popular one with only 4 bullish hedge fund positions. Compared to these stocks Forbes Energy Services Ltd. (NASDAQ:FES) is even less popular than MELA. 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.