2. NOW Inc. (NYSE:DNOW)
Number of Hedge Fund Holders: 21
NOW Inc. (NYSE:DNOW) distributes energy and industrial products. Scion first opened a position in the stock in late 2020, purchasing 1.5 million shares at an average price of $5.63 per share. Burry then proceeded to reduce that position by almost half in the next quarter before selling it off entirely in the second quarter of 2021. In the third quarter, he bought a new stake in the firm comprising 150,000 shares purchased at an average price of $8.17 per share. This holding was sold off entirely in the fourth quarter of 2021.
NOW Inc. (NYSE:DNOW) posted earnings for the fourth quarter of 2021 in mid-February, reporting earnings per share of $0.07, beating estimates by $0.04. The revenue over the period was $432 million, up 35% year-on-year and beating expectations by $6 million.
Among the hedge funds being tracked by Insider Monkey, New York-based investment firm Renaissance Technologies is a leading shareholder in NOW Inc. (NYSE: DNOW) with 5 million shares worth more than $42 million.
At the end of the fourth quarter of 2021, 21 hedge funds in the database of Insider Monkey held stakes worth $121 million in NOW Inc. (NYSE:DNOW), compared to 18 in the previous quarter worth $81 million.
In its Q3 2020 investor letter, Palm Valley Capital, an asset management firm, highlighted a few stocks and NOW Inc. (NYSE:DNOW) was one of them. Here is what the fund said:
“NOW Inc. (NYSE:DNOW) is a 2014 spinoff from National Oilwell Varco and has a 150-year legacy as a distributor to the oil and gas and industrial markets. Through a vast network of 245 locations, NOW’s 300,000 SKU product offering addresses all segments of the energy value chain, from upstream E&Ps to midstream infrastructure to downstream refining, in addition to industrial end markets including chemicals, mining, utilities, and manufacturing. When energy companies reduce activity, NOW suffers. However, it has streamlined its business since the last oil and gas downturn and expects reduced operating losses this round. As of June 30th, NOW Inc. (NYSE:DNOW) had $269 million of cash and no debt ($497 million market cap), although if demand recovers as we expect, some cash will be reinvested in working capital. The stock is currently selling for 66% of tangible book value.
Pason and NOW represent our fourth and fifth investments in the energy sector. The active rig count in the U.S. is at all-time lows. When considering our timing, we concluded, if not now, when? Our largest energy holding is Helmerich & Payne, the nation’s largest drilling contractor. It’s selling for half of book value. We believe the financial strength of our holdings is far above the typical energy company. Even so, we have kept our exposure to the energy sector in check given our concerns about the overall economy.”
