Is Nine Energy Service, Inc. (NINE) A Good Stock To Buy?

A whopping number of 13F filings filed with U.S. Securities and Exchange Commission has been processed by Insider Monkey so that individual investors can look at the overall hedge fund sentiment towards the stocks included in their watchlists. These freshly-submitted public filings disclose money managers’ equity positions as of the end of the three-month period that ended March 31st, so let’s proceed with the discussion of the hedge fund sentiment on Nine Energy Service, Inc. (NYSE:NINE).

Is NINE a good stock to buy? Nine Energy Service, Inc. (NYSE:NINE) shareholders have witnessed a decrease in hedge fund sentiment recently. Nine Energy Service, Inc. (NYSE:NINE) was in 6 hedge funds’ portfolios at the end of March. The all time high for this statistic is 12. There were 7 hedge funds in our database with NINE holdings at the end of December. Our calculations also showed that NINE isn’t among the 30 most popular stocks among hedge funds (click for Q1 rankings).

In the financial world there are a large number of tools investors have at their disposal to grade stocks. A pair of the most under-the-radar tools are hedge fund and insider trading indicators. We have shown that, historically, those who follow the top picks of the best fund managers can outperform the broader indices by a solid amount. Insider Monkey’s monthly stock picks returned 206.8% since March 2017 and outperformed the S&P 500 ETFs by more than 115 percentage points (see the details here). That’s why we believe hedge fund sentiment is a useful indicator that investors should pay attention to.

At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, an activist hedge fund owns nearly 40% of this $24 biotech stock and is trying to buy the rest for around $50. So, we recommended a long position to our monthly premium newsletter subscribers. 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. With all of this in mind we’re going to take a look at the fresh hedge fund action encompassing Nine Energy Service, Inc. (NYSE:NINE).

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

At Q1’s end, a total of 6 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -14% from one quarter earlier. The graph below displays the number of hedge funds with bullish position in NINE over the last 23 quarters. With hedgies’ capital changing hands, there exists a select group of noteworthy hedge fund managers who were increasing their holdings considerably (or already accumulated large positions).

When looking at the institutional investors followed by Insider Monkey, Phill Gross and Robert Atchinson’s Adage Capital Management has the number one position in Nine Energy Service, Inc. (NYSE:NINE), worth close to $3.9 million, accounting for less than 0.1%% of its total 13F portfolio. The second most bullish fund manager is Renaissance Technologies, which holds a $0.8 million position; less than 0.1%% of its 13F portfolio is allocated to the company. Other peers that are bullish consist of Ken Griffin’s Citadel Investment Group, Israel Englander’s Millennium Management and Ken Griffin’s Citadel Investment Group. In terms of the portfolio weights assigned to each position Adage Capital Management allocated the biggest weight to Nine Energy Service, Inc. (NYSE:NINE), around 0.01% of its 13F portfolio. Renaissance Technologies is also relatively very bullish on the stock, dishing out 0.001 percent of its 13F equity portfolio to NINE.

Since Nine Energy Service, Inc. (NYSE:NINE) has witnessed falling interest from the smart money, we can see that there was a specific group of funds that slashed their full holdings in the first quarter. At the top of the heap, David Harding’s Winton Capital Management sold off the biggest investment of the “upper crust” of funds monitored by Insider Monkey, totaling about $0 million in stock. Roger Ibbotson’s fund, Zebra Capital Management, also said goodbye to its stock, about $0 million worth. These bearish behaviors are interesting, as total hedge fund interest fell by 1 funds in the first quarter.

Let’s check out hedge fund activity in other stocks similar to Nine Energy Service, Inc. (NYSE:NINE). These stocks are U.S. Gold Corp. (NASDAQ:USAU), Moxian, Inc. (NASDAQ:MOXC), Quest Resource Holding Corp (NASDAQ:QRHC), Qualigen Therapeutics, Inc. (NASDAQ:QLGN), NeuroBo Pharmaceuticals, Inc. (NASDAQ:NRBO), Purple Biotech Ltd. (NASDAQ:PPBT), and Myomo Inc. (NYSE:MYO). All of these stocks’ market caps are closest to NINE’s market cap.

View table here if you experience formatting issues.

As you can see these stocks had an average of 2.9 hedge funds with bullish positions and the average amount invested in these stocks was $3 million. That figure was $5 million in NINE’s case. Quest Resource Holding Corp (NASDAQ:QRHC) is the most popular stock in this table. On the other hand U.S. Gold Corp. (NASDAQ:USAU) is the least popular one with only 1 bullish hedge fund positions. Nine Energy Service, Inc. (NYSE:NINE) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for NINE is 54.7. 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 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 19.3% in 2021 through June 25th and still beat the market by 4.8 percentage points. Hedge funds were also right about betting on NINE as the stock returned 27% since the end of Q1 (through 6/25) and outperformed the market. Hedge funds were rewarded for their relative bullishness.

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