Here is What Hedge Funds Think About ProPetro Holding Corp. (PUMP)

Before we spend countless hours researching a company, we like to analyze what insiders, hedge funds and billionaire investors think of the stock first. This is a necessary first step in our investment process because our research has shown that the elite investors’ consensus returns have been exceptional. In the following paragraphs, we find out what the billionaire investors and hedge funds think of ProPetro Holding Corp. (NYSE:PUMP).

Is ProPetro Holding Corp. (NYSE:PUMP) the right investment to pursue these days? Prominent investors were becoming less hopeful. The number of long hedge fund positions were trimmed by 3 in recent months. ProPetro Holding Corp. (NYSE:PUMP) was in 17 hedge funds’ portfolios at the end of March. The all time high for this statistic is 24. Our calculations also showed that PUMP isn’t among the 30 most popular stocks among hedge funds (click for Q1 rankings). There were 20 hedge funds in our database with PUMP holdings at the end of December.

Hedge funds’ reputation as shrewd investors has been tarnished in the last decade as their hedged returns couldn’t keep up with the unhedged returns of the market indices. Hedge funds have more than $3.5 trillion in assets under management, so you can’t expect their entire portfolios to beat the market by large margins. Our research was able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by more than 115 percentage points since March 2017 (see the details here). So you can still find a lot of gems by following hedge funds’ moves today.

At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, pet market is growing at a 7% annual rate and is expected to reach $110 billion in 2021. So, we are checking out the 5 best stocks for animal lovers. We go through lists like the 15 best Jim Cramer stocks to identify the next Tesla that will deliver outsized returns. Even though we recommend positions in only a tiny fraction of the companies we analyze, we check out as many stocks as we can. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. You can subscribe to our free daily newsletter on our homepage. Now let’s take a look at the recent hedge fund action encompassing ProPetro Holding Corp. (NYSE:PUMP).

Do Hedge Funds Think PUMP Is A Good Stock To Buy Now?

At the end of March, a total of 17 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -15% from one quarter earlier. By comparison, 13 hedge funds held shares or bullish call options in PUMP a year ago. So, let’s examine which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

According to Insider Monkey’s hedge fund database, Ken Fisher’s Fisher Asset Management has the largest position in ProPetro Holding Corp. (NYSE:PUMP), worth close to $17.5 million, corresponding to less than 0.1%% of its total 13F portfolio. Sitting at the No. 2 spot is Phill Gross and Robert Atchinson of Adage Capital Management, with a $17.2 million position; less than 0.1%% of its 13F portfolio is allocated to the company. Some other professional money managers that are bullish encompass Paul Marshall and Ian Wace’s Marshall Wace LLP, Peter Rathjens, Bruce Clarke and John Campbell’s Arrowstreet Capital and Ken Griffin’s Citadel Investment Group. In terms of the portfolio weights assigned to each position Algert Global allocated the biggest weight to ProPetro Holding Corp. (NYSE:PUMP), around 0.16% of its 13F portfolio. Marshall Wace LLP is also relatively very bullish on the stock, dishing out 0.07 percent of its 13F equity portfolio to PUMP.

Because ProPetro Holding Corp. (NYSE:PUMP) has experienced bearish sentiment from the smart money, it’s easy to see that there exists a select few fund managers who were dropping their positions entirely in the first quarter. It’s worth mentioning that Valerie Malter’s Matarin Capital cut the biggest investment of the 750 funds watched by Insider Monkey, worth close to $4.2 million in stock. Vince Maddi and Shawn Brennan’s fund, SIR Capital Management, also sold off its stock, about $3.4 million worth. These moves are intriguing to say the least, as aggregate hedge fund interest fell by 3 funds in the first quarter.

Let’s now review hedge fund activity in other stocks – not necessarily in the same industry as ProPetro Holding Corp. (NYSE:PUMP) but similarly valued. We will take a look at Zogenix, Inc. (NASDAQ:ZGNX), National Energy Services Reunited Corp. (NASDAQ:NESR), Grupo Financiero Galicia S.A. (NASDAQ:GGAL), Ideanomics, Inc. (NASDAQ:IDEX), Arcturus Therapeutics Holdings Inc. (NASDAQ:ARCT), Cara Therapeutics Inc (NASDAQ:CARA), and Corecivic Inc. (NYSE:CXW). This group of stocks’ market values are similar to PUMP’s market value.

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As you can see these stocks had an average of 13.9 hedge funds with bullish positions and the average amount invested in these stocks was $135 million. That figure was $76 million in PUMP’s case. Zogenix, Inc. (NASDAQ:ZGNX) is the most popular stock in this table. On the other hand Grupo Financiero Galicia S.A. (NASDAQ:GGAL) is the least popular one with only 7 bullish hedge fund positions. ProPetro Holding Corp. (NYSE:PUMP) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for PUMP is 59. Stocks with higher number of hedge fund positions relative to other stocks as well as relative to their historical range receive a higher sentiment score. This is a slightly positive signal but we’d rather spend our time researching stocks that hedge funds are piling on. Our calculations showed that top 5 most popular stocks among hedge funds returned 95.8% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 40 percentage points. These stocks gained 28.5% in 2021 through July 23rd and beat the market again by 10.1 percentage points. Unfortunately PUMP wasn’t nearly as popular as these 5 stocks and hedge funds that were betting on PUMP were disappointed as the stock returned -26.7% since the end of March (through 7/23) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 5 most popular stocks among hedge funds as many of these stocks already outperformed the market since 2019.

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