Smart Money Is Fleeing Patterson-UTI Energy, Inc. (PTEN)

Is Patterson-UTI Energy, Inc. (NASDAQ:PTEN) a good stock to buy right now? We at Insider Monkey like to examine what billionaires and hedge funds think of a company before doing days of research on it. Given their 2-and-20 payment structure, hedge funds have more resources than the average investor. The funds have access to expert networks and get tips from industry insiders. They also have numerous Ivy League graduates and MBAs in their employ. Like everyone else, hedge funds perform miserably at times, but their consensus picks have historically outperformed the market after risk adjustments.

Is Patterson-UTI Energy, Inc. (NASDAQ:PTEN) a healthy stock for your portfolio? Investors who are in the know are in a pessimistic mood. The number of bullish hedge fund positions shrunk by 10 lately. Patterson-UTI Energy, Inc. was in 25 hedge funds’ portfolios at the end of September. There were 35 hedge funds in our database with Patterson-UTI Energy, Inc. positions at the end of the previous quarter. The level and the change in hedge fund popularity aren’t the only variables you need to analyze to decipher hedge funds’ perspectives. A stock may witness a boost in popularity but it may still be less popular than similarly priced stocks. That’s why at the end of this article we will examine companies such as Sterling Bancorp (NYSE:STL), Diebold Incorporated (NYSE:DBD), and Tootsie Roll Industries, Inc. (NYSE:TR) to gather more data points.

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Now, let’s take a look at the key action encompassing Patterson-UTI Energy, Inc. (NASDAQ:PTEN).

What does the smart money think about Patterson-UTI Energy, Inc. (NASDAQ:PTEN)?

At the end of the third quarter, a total of 25 of the hedge funds tracked by Insider Monkey were long this stock, a 29% drop-off from the second quarter. With hedgies’ sentiment swirling, there exists a few key hedge fund managers who were boosting their holdings significantly (or had already accumulated large positions).

According to Insider Monkey’s hedge fund database, Ken Griffin’s Citadel Investment Group has the largest position in Patterson-UTI Energy, Inc. (NASDAQ:PTEN), worth close to $58.4 million, comprising 0.1% of its total 13F portfolio. The second-most bullish investor is First Pacific Advisors LLC, led by Robert Rodriguez and Steven Romick, holding a $52.2 million position; the fund has 0.4% of its 13F portfolio invested in the stock. Other hedge funds and institutional investors that are bullish include Curtis Macnguyen’s Ivory Capital (Investment Mgmt), Israel Englander’s Millennium Management, and Anand Parekh’s Alyeska Investment Group.

Seeing as Patterson-UTI Energy, Inc. (NASDAQ:PTEN) has witnessed a declination in interest from the aggregate hedge fund industry, we can see that there were a few hedgies that slashed their full holdings by the end of the third quarter. Interestingly, Brian Taylor’s Pine River Capital Management cut the biggest investment of the “upper crust” of funds monitored by Insider Monkey, comprising an estimated $15.7 million in stock, and Kyle Bass’ Hayman Advisors was right behind this move, as the fund cut about $13.1 million worth of shares. These transactions are interesting, as aggregate hedge fund interest fell by 10 funds by the end of the third quarter.

Let’s check out hedge fund activity in other stocks – not necessarily in the same industry as Patterson-UTI Energy, Inc. (NASDAQ:PTEN) but similarly valued. We will take a look at Sterling Bancorp (NYSE:STL), Diebold Incorporated (NYSE:DBD), Tootsie Roll Industries, Inc. (NYSE:TR), and Nimble Storage Inc (NYSE:NMBL). This group of stocks’ market values match Patterson-UTI Energy, Inc.’s market value.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
STL 21 245040 1
DBD 10 267619 -5
TR 9 79318 0
NMBL 18 151621 -1

As you can see these stocks had an average of 14.5 hedge funds with bullish positions and the average amount invested in these stocks was $186 million. That figure was $346 million in Patterson-UTI Energy, Inc.’s case. Sterling Bancorp (NYSE:STL) is the most popular stock in this table. On the other hand Tootsie Roll Industries, Inc. (NYSE:TR) is the least popular one with only 9 bullish hedge fund positions. Compared to these stocks Patterson-UTI Energy, Inc. (NASDAQ:PTEN) is more popular among hedge funds. Considering that hedge funds are fond of this stock in relation to its market cap peers and have more money invested in it, it may be a good idea to analyze it in detail and potentially include it in your portfolio, bearing in mind that a lot of top investors did flee the stock in Q3.