Is RPC, Inc. (RES) Going to Burn These Hedge Funds?

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RPC, Inc. (NYSE:RES) was in 16 hedge funds’ portfolio at the end of the first quarter of 2013. RES investors should pay attention to an increase in support from the world’s most elite money managers in recent months. There were 10 hedge funds in our database with RES positions at the end of the previous quarter.

If you’d ask most traders, hedge funds are perceived as slow, outdated financial tools of yesteryear. While there are greater than 8000 funds in operation at the moment, we at Insider Monkey choose to focus on the upper echelon of this group, close to 450 funds. It is estimated that this group has its hands on the lion’s share of the hedge fund industry’s total asset base, and by tracking their top stock picks, we have unearthed a number of investment strategies that have historically outpaced Mr. Market. Our small-cap hedge fund strategy beat the S&P 500 index by 18 percentage points per year for a decade in our back tests, and since we’ve started sharing our picks with our subscribers at the end of August 2012, we have trumped the S&P 500 index by 23.3 percentage points in 8 months (see the details here).

Equally as important, bullish insider trading sentiment is a second way to break down the stock market universe. Obviously, there are a variety of motivations for a corporate insider to drop shares of his or her company, but just one, very clear reason why they would behave bullishly. Plenty of academic studies have demonstrated the market-beating potential of this tactic if shareholders know where to look (learn more here).

Now, we’re going to take a gander at the latest action regarding RPC, Inc. (NYSE:RES).

How are hedge funds trading RPC, Inc. (NYSE:RES)?

At Q1’s end, a total of 16 of the hedge funds we track were long in this stock, a change of 60% from one quarter earlier. With the smart money’s capital changing hands, there exists a few key hedge fund managers who were increasing their holdings meaningfully.

RPC, Inc. (NYSE:RES)When looking at the hedgies we track, Mario Gabelli’s GAMCO Investors had the biggest position in RPC, Inc. (NYSE:RES), worth close to $101.1 million, accounting for 0.6% of its total 13F portfolio. Coming in second is Chuck Royce of Royce & Associates, with a $33.6 million position; the fund has 0.1% of its 13F portfolio invested in the stock. Remaining hedge funds that are bullish include Joel Greenblatt’s Gotham Asset Management, Cliff Asness’s AQR Capital Management and Ken Griffin’s Citadel Investment Group.

With a general bullishness amongst the heavyweights, specific money managers have been driving this bullishness. Arrowstreet Capital, managed by Peter Rathjens, Bruce Clarke and John Campbell, created the most outsized position in RPC, Inc. (NYSE:RES). Arrowstreet Capital had 2.5 million invested in the company at the end of the quarter. Israel Englander’s Millennium Management also initiated a $2.2 million position during the quarter. The other funds with new positions in the stock are Arvind Sanger’s GeoSphere Capital Management, John Overdeck and David Siegel’s Two Sigma Advisors, and Matthew Tewksbury’s Stevens Capital Management.

What do corporate executives and insiders think about RPC, Inc. (NYSE:RES)?

Bullish insider trading is best served when the company in question has seen transactions within the past half-year. Over the last 180-day time frame, RPC, Inc. (NYSE:RES) has experienced zero unique insiders buying, and zero insider sales (see the details of insider trades here).

Let’s also review hedge fund and insider activity in other stocks similar to RPC, Inc. (NYSE:RES). These stocks are Oil States International, Inc. (NYSE:OIS), Precision Drilling Corp (USA) (NYSE:PDS), Forum Energy Technologies Inc (NYSE:FET), Superior Energy Services, Inc. (NYSE:SPN), and Dril-Quip, Inc. (NYSE:DRQ). This group of stocks belong to the oil & gas equipment & services industry and their market caps resemble RES’s market cap.

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