Hedge Funds Aren’t Done Selling Mammoth Energy Services, Inc. (TUSK)

In this article you are going to find out whether hedge funds think Mammoth Energy Services, Inc. (NASDAQ:TUSK) is a good investment right now. We like to check what the smart money thinks first before doing extensive research on a given stock. Although there have been several high profile failed hedge fund picks, the consensus picks among hedge fund investors have historically outperformed the market after adjusting for known risk attributes. It’s not surprising given that hedge funds have access to better information and more resources to predict the winners in the stock market.

Mammoth Energy Services, Inc. (NASDAQ:TUSK) was in 6 hedge funds’ portfolios at the end of the first quarter of 2020. TUSK has experienced a decrease in activity from the world’s largest hedge funds lately. There were 7 hedge funds in our database with TUSK positions at the end of the previous quarter. Our calculations also showed that TUSK isn’t among the 30 most popular stocks among hedge funds (click for Q1 rankings and see the video for a quick look at the top 5 stocks).

Video: Watch our video about the top 5 most popular hedge fund stocks.

To the average investor there are a lot of methods investors put to use to grade their stock investments. Some of the most innovative methods are hedge fund and insider trading sentiment. We have shown that, historically, those who follow the best picks of the elite hedge fund managers can outclass the broader indices by a superb margin (see the details here).

Charles Davidson - Wexford Capital

Charles Davidson of Wexford Capital

At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, 2020’s unprecedented market conditions provide us with the highest number of trading opportunities in a decade. So we are checking out stocks recommended/scorned by legendary Bill Miller. We interview hedge fund managers and ask them about their best ideas. If you want to find out the best healthcare stock to buy right now, you can watch our latest hedge fund manager interview here. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. Our best call in 2020 was shorting the market when the S&P 500 was trading at 3150 after realizing the coronavirus pandemic’s significance before most investors. Now let’s analyze the recent hedge fund action surrounding Mammoth Energy Services, Inc. (NASDAQ:TUSK).

What have hedge funds been doing with Mammoth Energy Services, Inc. (NASDAQ:TUSK)?

At the end of the first quarter, a total of 6 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -14% from one quarter earlier. By comparison, 17 hedge funds held shares or bullish call options in TUSK a year ago. With the smart money’s sentiment swirling, there exists an “upper tier” of noteworthy hedge fund managers who were boosting their stakes substantially (or already accumulated large positions).

The largest stake in Mammoth Energy Services, Inc. (NASDAQ:TUSK) was held by Wexford Capital, which reported holding $16.5 million worth of stock at the end of September. It was followed by Two Sigma Advisors with a $0.2 million position. Other investors bullish on the company included D E Shaw, Winton Capital Management, and Zebra Capital Management. In terms of the portfolio weights assigned to each position Wexford Capital allocated the biggest weight to Mammoth Energy Services, Inc. (NASDAQ:TUSK), around 6.11% of its 13F portfolio. Zebra Capital Management is also relatively very bullish on the stock, earmarking 0.05 percent of its 13F equity portfolio to TUSK.

Because Mammoth Energy Services, Inc. (NASDAQ:TUSK) has witnessed bearish sentiment from the entirety of the hedge funds we track, it’s safe to say that there was a specific group of money managers that elected to cut their full holdings by the end of the first quarter. Intriguingly, Charles Lemonides’s Valueworks LLC dropped the biggest investment of all the hedgies followed by Insider Monkey, valued at about $4.8 million in stock, and Israel Englander’s Millennium Management was right behind this move, as the fund dumped about $0.1 million worth. These bearish behaviors are intriguing to say the least, as aggregate hedge fund interest fell by 1 funds by the end of the first quarter.

Let’s now review hedge fund activity in other stocks – not necessarily in the same industry as Mammoth Energy Services, Inc. (NASDAQ:TUSK) but similarly valued. We will take a look at Issuer Direct Corporation (NYSE:ISDR), Full House Resorts, Inc. (NASDAQ:FLL), Spark Networks SE (NYSE:LOV), and ICC Holdings, Inc. (NASDAQ:ICCH). This group of stocks’ market values are closest to TUSK’s market value.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
ISDR 1 1019 -1
FLL 6 4143 -3
LOV 8 15310 -1
ICCH 3 1071 0
Average 4.5 5386 -1.25

View table here if you experience formatting issues.

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 $5 million. That figure was $17 million in TUSK’s case. Spark Networks SE (NYSE:LOV) is the most popular stock in this table. On the other hand Issuer Direct Corporation (NYSE:ISDR) is the least popular one with only 1 bullish hedge fund positions. Mammoth Energy Services, Inc. (NASDAQ:TUSK) is not the most popular stock in this group but hedge fund interest is still above average. Our calculations showed that top 10 most popular stocks among hedge funds returned 41.4% in 2019 and outperformed the S&P 500 ETF (SPY) by 10.1 percentage points. These stocks gained 13.9% in 2020 through June 10th but still beat the market by 14.2 percentage points. Hedge funds were also right about betting on TUSK as the stock returned 210.4% in Q2 (through June 10th) and outperformed the market. Hedge funds were rewarded for their relative bullishness.

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Disclosure: None. This article was originally published at Insider Monkey.