Is NexTier Oilfield Solutions Inc. (NEX) Going to Burn These Hedge Funds?

In this article we will check out the progression of hedge fund sentiment towards NexTier Oilfield Solutions Inc. (NYSE:NEX) and determine whether it is a good investment right now. We at Insider Monkey like to examine what billionaires and hedge funds think of a company before spending days of research on it. Given their 2 and 20 payment structure, hedge funds have more incentives and resources than the average investor. The funds have access to expert networks and get tips from industry insiders. They also employ numerous Ivy League graduates and MBAs. Like everyone else, hedge funds perform miserably at times, but their consensus picks have historically outperformed the market after risk adjustments.

Is NexTier Oilfield Solutions Inc. (NYSE:NEX) worth your attention right now? Investors who are in the know were becoming more confident. The number of long hedge fund positions advanced by 1 in recent months. NexTier Oilfield Solutions Inc. (NYSE:NEX) was in 23 hedge funds’ portfolios at the end of the first quarter of 2021. The all time high for this statistic is 29. Our calculations also showed that NEX isn’t among the 30 most popular stocks among hedge funds (click for Q1 rankings).

According to most market participants, hedge funds are assumed to be slow, old investment vehicles of the past. While there are greater than 8000 funds trading at present, Our experts look at the leaders of this group, approximately 850 funds. It is estimated that this group of investors watch over bulk of all hedge funds’ total capital, and by monitoring their first-class investments, Insider Monkey has found many investment strategies that have historically exceeded Mr. Market. Insider Monkey’s flagship short hedge fund strategy outrun the S&P 500 short ETFs by around 20 percentage points per year since its inception in March 2017. Also, our monthly newsletter’s portfolio of long stock picks returned 206.8% since March 2017 (through May 2021) and beat the S&P 500 Index by more than 115 percentage points. You can download a sample issue of this newsletter on our website .

Ron Gutfleish Elm Ridge Capital

Ron Gutfleish of Elm Ridge Capital

At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, Chuck Schumer recently stated that marijuana legalization will be a Senate priority. So, we are checking out this under the radar stock that will benefit from this. We go through lists like the 10 best battery stocks to pick the next Tesla that will deliver a 10x return. 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. Keeping this in mind we’re going to take a glance at the key hedge fund action surrounding NexTier Oilfield Solutions Inc. (NYSE:NEX).

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

At Q1’s end, a total of 23 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 5% from one quarter earlier. The graph below displays the number of hedge funds with bullish position in NEX over the last 23 quarters. So, let’s examine which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

Among these funds, Cerberus Capital Management held the most valuable stake in NexTier Oilfield Solutions Inc. (NYSE:NEX), which was worth $120.4 million at the end of the fourth quarter. On the second spot was Pzena Investment Management which amassed $41 million worth of shares. Renaissance Technologies, Fisher Asset Management, and CaaS Capital were also very fond of the stock, becoming one of the largest hedge fund holders of the company. 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 3.86% of its 13F portfolio. Cerberus Capital Management is also relatively very bullish on the stock, setting aside 3.33 percent of its 13F equity portfolio to NEX.

Now, specific money managers were breaking ground themselves. CaaS Capital, managed by Frank Fu, initiated the most outsized position in NexTier Oilfield Solutions Inc. (NYSE:NEX). CaaS Capital had $8.6 million invested in the company at the end of the quarter. Ron Gutfleish’s Elm Ridge Capital also made a $1.7 million investment in the stock during the quarter. The other funds with new positions in the stock are Blair Baker’s Precept Capital Management, Paul Tudor Jones’s Tudor Investment Corp, and Ben Levine, Andrew Manuel and Stefan Renold’s LMR Partners.

Let’s check out hedge fund activity in other stocks similar to NexTier Oilfield Solutions Inc. (NYSE:NEX). We will take a look at Kelly Services, Inc. (NASDAQ:KELYA), Dyne Therapeutics, Inc. (NASDAQ:DYN), Gravity Co., LTD. (NASDAQ:GRVY), Global Medical REIT Inc. (NYSE:GMRE), Associated Capital Group, Inc. (NYSE:AC), Merus N.V. (NASDAQ:MRUS), and Altabancorp (NASDAQ:ALTA). This group of stocks’ market caps are closest to NEX’s market cap.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
KELYA 8 12834 2
DYN 21 237563 -1
GRVY 7 20043 3
GMRE 18 36592 10
AC 4 50493 -1
MRUS 23 283671 9
ALTA 4 27867 -2
Average 12.1 95580 2.9

View table here if you experience formatting issues.

As you can see these stocks had an average of 12.1 hedge funds with bullish positions and the average amount invested in these stocks was $96 million. That figure was $244 million in NEX’s case. Merus N.V. (NASDAQ:MRUS) is the most popular stock in this table. On the other hand Associated Capital Group, Inc. (NYSE:AC) is the least popular one with only 4 bullish hedge fund positions. NexTier Oilfield Solutions Inc. (NYSE:NEX) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for NEX is 79.8. 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. 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 23.8% in 2021 through July 16th and beat the market again by 7.7 percentage points. Unfortunately NEX wasn’t nearly as popular as these 5 stocks and hedge funds that were betting on NEX were disappointed as the stock returned 4.3% since the end of March (through 7/16) 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.