Hedge Funds Have Never Been This Bullish On Liberty Oilfield Services Inc. (LBRT)

How do you pick the next stock to invest in? One way would be to spend hours of research browsing through thousands of publicly traded companies. However, an easier way is to look at the stocks that smart money investors are collectively bullish on. Hedge funds and other institutional investors usually invest large amounts of capital and have to conduct due diligence while choosing their next pick. They don’t always get it right, but, on average, their stock picks historically generated strong returns after adjusting for known risk factors. With this in mind, let’s take a look at the recent hedge fund activity surrounding Liberty Oilfield Services Inc. (NYSE:LBRT).

Liberty Oilfield Services Inc. (NYSE:LBRT) was in 14 hedge funds’ portfolios at the end of March. LBRT investors should pay attention to an increase in hedge fund sentiment lately. There were 12 hedge funds in our database with LBRT positions at the end of the previous quarter. Our calculations also showed that LBRT isn’t among the 30 most popular stocks among hedge funds.

Why do we pay any attention at all to hedge fund sentiment? Our research has shown that hedge funds’ large-cap stock picks indeed failed to beat the market between 1999 and 2016. However, we were able to identify in advance a select group of hedge fund holdings that outperformed the market by 40 percentage points since May 2014 through May 30, 2019 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that’ll significantly underperform the market. We have been tracking and sharing the list of these stocks since February 2017 and they lost 30.9% through May 30, 2019. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.

Phill Gross, Adage Capital Management

Let’s review the new hedge fund action encompassing Liberty Oilfield Services Inc. (NYSE:LBRT).

Hedge fund activity in Liberty Oilfield Services Inc. (NYSE:LBRT)

At the end of the first quarter, a total of 14 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 17% from the fourth quarter of 2018. Below, you can check out the change in hedge fund sentiment towards LBRT over the last 15 quarters. So, let’s review which hedge funds were among the top holders of the stock and which hedge funds were making big moves.


According to publicly available hedge fund and institutional investor holdings data compiled by Insider Monkey, GMT Capital, managed by Thomas E. Claugus, holds the biggest position in Liberty Oilfield Services Inc. (NYSE:LBRT). GMT Capital has a $42.3 million position in the stock, comprising 1.4% of its 13F portfolio. On GMT Capital’s heels is Millennium Management, managed by Israel Englander, which holds a $15.7 million position; the fund has less than 0.1%% of its 13F portfolio invested in the stock. Some other professional money managers with similar optimism include Phill Gross and Robert Atchinson’s Adage Capital Management, Peter Rathjens, Bruce Clarke and John Campbell’s Arrowstreet Capital and Ken Griffin’s Citadel Investment Group.

Now, some big names have jumped into Liberty Oilfield Services Inc. (NYSE:LBRT) headfirst. Arrowstreet Capital, managed by Peter Rathjens, Bruce Clarke and John Campbell, assembled the largest position in Liberty Oilfield Services Inc. (NYSE:LBRT). Arrowstreet Capital had $5.9 million invested in the company at the end of the quarter. David Costen Haley’s HBK Investments also initiated a $1 million position during the quarter. The following funds were also among the new LBRT investors: Matthew Hulsizer’s PEAK6 Capital Management, Joel Greenblatt’s Gotham Asset Management, and Paul Tudor Jones’s Tudor Investment Corp.

Let’s also examine hedge fund activity in other stocks similar to Liberty Oilfield Services Inc. (NYSE:LBRT). These stocks are Eagle Bancorp, Inc. (NASDAQ:EGBN), PennyMac Financial Services Inc (NYSE:PFSI), Provident Financial Services, Inc. (NYSE:PFS), and Callon Petroleum Company (NYSE:CPE). This group of stocks’ market caps match LBRT’s market cap.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
EGBN 11 45405 -1
PFSI 16 113181 6
PFS 6 55197 -2
CPE 23 191982 1
Average 14 101441 1

View table here if you experience formatting issues.

As you can see these stocks had an average of 14 hedge funds with bullish positions and the average amount invested in these stocks was $101 million. That figure was $77 million in LBRT’s case. Callon Petroleum Company (NYSE:CPE) is the most popular stock in this table. On the other hand Provident Financial Services, Inc. (NYSE:PFS) is the least popular one with only 6 bullish hedge fund positions. Liberty Oilfield Services Inc. (NYSE:LBRT) 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. Our calculations showed that top 20 most popular stocks among hedge funds returned 6.2% in Q2 through June 19th and outperformed the S&P 500 ETF (SPY) by nearly 3 percentage points. Unfortunately LBRT wasn’t nearly as popular as these 20 stocks (hedge fund sentiment was quite bearish); LBRT investors were disappointed as the stock returned -10.2% during the same time period and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 20 most popular stocks among hedge funds as 13 of these stocks already outperformed the market so far in Q2.

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