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Is Nabors Industries Ltd. (NBR) Going To Burn These Hedge Funds ?

Is Nabors Industries Ltd. (NYSE:NBR) a good bet right now? We like to analyze hedge fund sentiment before conducting days of in-depth research. We do so because hedge funds and other elite investors have numerous Ivy League graduates, expert network advisers, and supply chain tipsters working or consulting for them. There is not a shortage of news stories covering failed hedge fund investments and it is a fact that hedge funds’ picks don’t beat the market 100% of the time, but their consensus picks have historically done very well and have outperformed the market after adjusting for risk.

Is Nabors Industries Ltd. (NYSE:NBR) a sound stock to buy now? The smart money is getting less bullish. The number of long hedge fund positions retreated by 8 recently. Our calculations also showed that NBR isn’t among the 30 most popular stocks among hedge funds (see the video below). NBR was in 22 hedge funds’ portfolios at the end of June. There were 30 hedge funds in our database with NBR holdings at the end of the previous quarter.
5 Most Popular Stocks Among Hedge Funds
Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.

To most market participants, hedge funds are viewed as worthless, outdated investment vehicles of yesteryear. While there are greater than 8000 funds with their doors open today, We look at the bigwigs of this group, approximately 750 funds. These investment experts direct the lion’s share of the smart money’s total asset base, and by paying attention to their best stock picks, Insider Monkey has unsheathed a number of investment strategies that have historically defeated Mr. Market. Insider Monkey’s flagship hedge fund strategy outstripped the S&P 500 index by around 5 percentage points annually since its inception in May 2014. We were able to generate large returns even by identifying short candidates. Our portfolio of short stocks lost 25.7% since February 2017 (through September 30th) even though the market was up more than 33% during the same period. We just shared a list of 10 short targets in our latest quarterly update .

OMEGA ADVISORS

Unlike former hedge manager, Dr. Steve Sjuggerud, who is convinced Dow will soar past 40000, our long-short investment strategy doesn’t rely on bull markets to deliver double digit returns. We only rely on hedge fund buy/sell signals. Let’s analyze the recent hedge fund action regarding Nabors Industries Ltd. (NYSE:NBR).

What does smart money think about Nabors Industries Ltd. (NYSE:NBR)?

At Q2’s end, a total of 22 of the hedge funds tracked by Insider Monkey were long this stock, a change of -27% from the first quarter of 2019. On the other hand, there were a total of 37 hedge funds with a bullish position in NBR a year ago. With hedgies’ positions undergoing their usual ebb and flow, there exists a select group of notable hedge fund managers who were increasing their holdings substantially (or already accumulated large positions).

NBR_oct2019

According to Insider Monkey’s hedge fund database, Omega Advisors, managed by Leon Cooperman, holds the number one position in Nabors Industries Ltd. (NYSE:NBR). Omega Advisors has a $37.6 million position in the stock, comprising 2.2% of its 13F portfolio. The second most bullish fund manager is AQR Capital Management, managed by Cliff Asness, which holds a $14.4 million position; the fund has less than 0.1%% of its 13F portfolio invested in the stock. Other professional money managers with similar optimism comprise Renaissance Technologies, Joel Greenblatt’s Gotham Asset Management and Jerome L. Simon’s Lonestar Capital Management.

Judging by the fact that Nabors Industries Ltd. (NYSE:NBR) has witnessed falling interest from the entirety of the hedge funds we track, logic holds that there exists a select few fund managers who were dropping their positions entirely last quarter. It’s worth mentioning that Todd J. Kantor’s Encompass Capital Advisors cut the largest stake of all the hedgies monitored by Insider Monkey, totaling about $19.2 million in stock, and Dmitry Balyasny’s Balyasny Asset Management was right behind this move, as the fund dropped about $3.2 million worth. These transactions are important to note, as total hedge fund interest was cut by 8 funds last quarter.

Let’s check out hedge fund activity in other stocks similar to Nabors Industries Ltd. (NYSE:NBR). We will take a look at The Chefs Warehouse, Inc (NASDAQ:CHEF), Chase Corporation (NYSEAMEX:CCF), NV5 Holdings Inc (NASDAQ:NVEE), and Kelly Services, Inc. (NASDAQ:KELYA). This group of stocks’ market valuations match NBR’s market valuation.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
CHEF 9 54993 -1
CCF 8 84745 -1
NVEE 12 30332 2
KELYA 10 23858 -3
Average 9.75 48482 -0.75

View table here if you experience formatting issues.

As you can see these stocks had an average of 9.75 hedge funds with bullish positions and the average amount invested in these stocks was $48 million. That figure was $105 million in NBR’s case. NV5 Holdings Inc (NASDAQ:NVEE) is the most popular stock in this table. On the other hand Chase Corporation (NYSEAMEX:CCF) is the least popular one with only 8 bullish hedge fund positions. Compared to these stocks Nabors Industries Ltd. (NYSE:NBR) is more popular among hedge funds. Our calculations showed that top 20 most popular stocks among hedge funds returned 24.4% in 2019 through September 30th and outperformed the S&P 500 ETF (SPY) by 4 percentage points. Unfortunately NBR wasn’t nearly as popular as these 20 stocks and hedge funds that were betting on NBR were disappointed as the stock returned -35.2% during the third quarter 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 many of these stocks already outperformed the market in Q3.

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

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