Insider Monkey has processed numerous 13F filings of hedge funds and successful value investors to create an extensive database of hedge fund holdings. The 13F filings show the hedge funds’ and successful investors’ positions as of the end of the second quarter. You can find articles about an individual hedge fund’s trades on numerous financial news websites. However, in this article we will take a look at their collective moves over the last 5 years and analyze what the smart money thinks of NexTier Oilfield Solutions Inc. (NYSE:NEX) based on that data and determine whether they were really smart about the stock.
Is NexTier Oilfield Solutions Inc. (NYSE:NEX) a marvelous investment now? The best stock pickers were betting on the stock. The number of long hedge fund bets inched up by 3 recently. NexTier Oilfield Solutions Inc. (NYSE:NEX) was in 24 hedge funds’ portfolios at the end of June. The all time high for this statistics is 29. Our calculations also showed that NEX isn’t among the 30 most popular stocks among hedge funds (click for Q2 rankings and see the video for a quick look at the top 5 stocks). There were 21 hedge funds in our database with NEX holdings at the end of March.
Video: Watch our video about the top 5 most popular hedge fund stocks.
Why do we pay any attention at all to hedge fund sentiment? Our research has shown that a select group of hedge fund holdings outperformed the S&P 500 ETFs by 56 percentage points since March 2017 (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 34% through August 17th. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
At Insider Monkey we scour multiple sources to uncover the next great investment idea. For example, legal marijuana is one of the fastest growing industries right now, so we are checking out stock pitches like “the Starbucks of cannabis” to identify the next tenbagger. We go through lists like the 10 most profitable companies in the world to pick the best large-cap stocks to buy. 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 website to get excerpts of these letters in your inbox. Keeping this in mind we’re going to review the key hedge fund action encompassing NexTier Oilfield Solutions Inc. (NYSE:NEX).
How are hedge funds trading NexTier Oilfield Solutions Inc. (NYSE:NEX)?
Heading into the third quarter of 2020, a total of 24 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 14% from one quarter earlier. On the other hand, there were a total of 21 hedge funds with a bullish position in NEX a year ago. So, let’s check out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
When looking at the institutional investors followed by Insider Monkey, Cerberus Capital Management, managed by Stephen Feinberg, holds the biggest position in NexTier Oilfield Solutions Inc. (NYSE:NEX). Cerberus Capital Management has a $95.3 million position in the stock, comprising 3.1% of its 13F portfolio. Sitting at the No. 2 spot is Richard S. Pzena of Pzena Investment Management, with a $21.1 million position; 0.1% of its 13F portfolio is allocated to the stock. Other peers that are bullish comprise Renaissance Technologies, Ken Fisher’s Fisher Asset Management and Israel Englander’s Millennium Management. In terms of the portfolio weights assigned to each position Covalent Capital Partners allocated the biggest weight to NexTier Oilfield Solutions Inc. (NYSE:NEX), around 14.62% of its 13F portfolio. Cerberus Capital Management is also relatively very bullish on the stock, setting aside 3.09 percent of its 13F equity portfolio to NEX.
As one would reasonably expect, key hedge funds were breaking ground themselves. Deep Basin Capital, managed by Matt Smith, established the largest position in NexTier Oilfield Solutions Inc. (NYSE:NEX). Deep Basin Capital had $6 million invested in the company at the end of the quarter. Donald Sussman’s Paloma Partners also initiated a $0.3 million position during the quarter. The following funds were also among the new NEX investors: Peter Algert and Kevin Coldiron’s Algert Coldiron Investors, Thomas Bailard’s Bailard Inc, and Paul Tudor Jones’s Tudor Investment Corp.
Let’s also examine hedge fund activity in other stocks – not necessarily in the same industry as NexTier Oilfield Solutions Inc. (NYSE:NEX) but similarly valued. These stocks are Viking Therapeutics, Inc. (NASDAQ:VKTX), 111, Inc. (NASDAQ:YI), A10 Networks Inc (NYSE:ATEN), Ocular Therapeutix Inc (NASDAQ:OCUL), FutureFuel Corp. (NYSE:FF), Extreme Networks, Inc (NASDAQ:EXTR), and Global Medical REIT Inc. (NYSE:GMRE). This group of stocks’ market caps resemble NEX’s market cap.
|Ticker||No of HFs with positions||Total Value of HF Positions (x1000)||Change in HF Position|
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As you can see these stocks had an average of 13 hedge funds with bullish positions and the average amount invested in these stocks was $59 million. That figure was $178 million in NEX’s case. A10 Networks Inc (NYSE:ATEN) is the most popular stock in this table. On the other hand 111, Inc. (NASDAQ:YI) is the least popular one with only 4 bullish hedge fund positions. Compared to these stocks NexTier Oilfield Solutions Inc. (NYSE:NEX) is more popular among hedge funds. Our overall hedge fund sentiment score for NEX is 82.8. 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. 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 21.3% in 2020 through September 25th and still beat the market by 17.7 percentage points. Unfortunately NEX wasn’t nearly as popular as these 10 stocks and hedge funds that were betting on NEX were disappointed as the stock returned -30.2% since the end of the second 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 10 most popular stocks among hedge funds as most of these stocks already outperformed the market in 2020.
Disclosure: None. This article was originally published at Insider Monkey.