Hedge Funds Are Losing Interest in Patterson-UTI Energy, Inc. (PTEN)

The elite funds run by legendary investors such as Dan Loeb and David Tepper make hundreds of millions of dollars for themselves and their investors by spending enormous resources doing research on small cap stocks that big investment banks don’t follow. Because of their pay structures, they have strong incentive to do the research necessary to beat the market. That’s why we pay close attention to what they think in small cap stocks. In this article, we take a closer look at Patterson-UTI Energy, Inc. (NASDAQ:PTEN) from the perspective of those elite funds.

Patterson-UTI Energy, Inc. (NASDAQ:PTEN) has seen a decrease in hedge fund sentiment in recent months. PTEN was in 23 hedge funds’ portfolios at the end of September. There were 30 hedge funds in our database with PTEN positions at the end of the previous quarter. The level and the change in hedge fund popularity aren’t the only variables you need to analyze to decipher hedge funds’ perspectives. A stock may witness a boost in popularity but it may still be less popular than similarly priced stocks. That’s why at the end of this article we will examine companies such as Enstar Group Ltd. (NASDAQ:ESGR), CNO Financial Group Inc (NYSE:CNO), and Piedmont Office Realty Trust, Inc. (NYSE:PDM) to gather more data points.

At Insider Monkey, we’ve developed an investment strategy that has delivered market-beating returns over the past 12 months. Our strategy identifies the 100 best-performing funds of the previous quarter from among the collection of 700+ successful funds that we track in our database, which we accomplish using our returns methodology. We then study the portfolios of those 100 funds using the latest 13F data to uncover the 30 most popular mid-cap stocks (market caps of between $1 billion and $10 billion) among them to hold until the next filing period. This strategy delivered 18% gains over the past 12 months, more than doubling the 8% returns enjoyed by the S&P 500 ETFs.

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

At the end of the third quarter, a total of 23 of the hedge funds tracked by Insider Monkey held long positions in this stock, a 23% drop from the previous quarter, pushing ownership of the stock among hedgies to its lowest level in a year. With the smart money’s capital changing hands, there exists a select group of notable hedge fund managers who were boosting their holdings considerably (or already accumulated large positions).

According to publicly available hedge fund and institutional investor holdings data compiled by Insider Monkey, Citadel Investment Group, managed by Ken Griffin, holds the most valuable position in Patterson-UTI Energy, Inc. (NASDAQ:PTEN). Citadel Investment Group has a $70.2 million position in the stock. Sitting at the No. 2 spot is First Pacific Advisors LLC, led by Robert Rodriguez and Steven Romick, holding a $67.2 million position. Other members of the smart money that are bullish contain Cliff Asness’ AQR Capital Management, Irving Kahn’s Kahn Brothers and Ron Gutfleish’s Elm Ridge Capital.