Is Natural Gas Services Group, Inc. (NGS) A Good Stock To Buy?

We view hedge fund activity in the stock as unfavorable, but in this case there was only a single hedge fund selling its entire position: Highbridge Capital Management. One hedge fund selling its entire position doesn’t always imply a bearish intent. Theoretically a hedge fund may decide to sell a promising position in order to invest the proceeds in a more promising idea. However, we don’t think this is the case in this case because none of the 700+ hedge funds tracked by Insider Monkey identified NGS as a viable investment and initiated a position in the stock.

Let’s check out hedge fund activity in other stocks similar to Natural Gas Services Group, Inc. (NYSE:NGS). We will take a look at THL Credit, Inc. (NASDAQ:TCRD), Del Frisco’s Restaurant Group Inc (NASDAQ:DFRG), Homeowners Choice Inc (NYSE:HCI), and Emerge Energy Services LP (NYSE:EMES). This group of stocks’ market caps are similar to NGS’s market cap.

As you can see these stocks had an average of 9 hedge funds with bullish positions and the average amount invested in these stocks was $30 million. That figure was $25 million in NGS’s case. Del Frisco’s Restaurant Group Inc (NASDAQ:DFRG) is the most popular stock in this table. On the other hand Emerge Energy Services LP (NYSE:EMES) is the least popular one with only 4 bullish hedge fund positions. Natural Gas Services Group, Inc. (NYSE:NGS) 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. In this regard DFRG might be a better candidate to consider taking a long position in.

Disclosure: None