The latest 13F reporting period has come and gone, and Insider Monkey is again at the forefront when it comes to making use of this gold mine of data. Insider Monkey finished processing 817 13F filings submitted by hedge funds and prominent investors. These filings show these funds’ portfolio positions as of September 30th, 2020. What do these smart investors think about Nine Energy Service, Inc. (NYSE:NINE)?
Nine Energy Service, Inc. (NYSE:NINE) shareholders have witnessed a decrease in enthusiasm from smart money lately. Nine Energy Service, Inc. (NYSE:NINE) was in 6 hedge funds’ portfolios at the end of September. The all time high for this statistics is 12. There were 12 hedge funds in our database with NINE positions at the end of the second quarter. Our calculations also showed that NINE isn’t among the 30 most popular stocks among hedge funds (click for Q3 rankings and see the video for a quick look at the top 5 stocks).
Video: Watch our video about the top 5 most popular hedge fund stocks.
Why do we pay any attention at all to hedge fund sentiment? Our research has shown that a select group of hedge fund holdings outperformed the S&P 500 ETFs by 66 percentage points since March 2017 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that’ll significantly underperform the market. We have been tracking and sharing the list of these stocks since February 2017 and they lost 13% through November 17th. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
Phillip Gross of Adage Capital
At Insider Monkey we scour multiple sources to uncover the next great investment idea. For example, Federal Reserve has been creating trillions of dollars electronically to keep the interest rates near zero. We believe this will lead to inflation and boost real estate prices. So, we recommended this real estate stock to our monthly premium newsletter subscribers. We go through lists like the 15 best blue chip stocks to pick the best large-cap stocks to buy. 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 website. Now we’re going to review the new hedge fund action regarding Nine Energy Service, Inc. (NYSE:NINE).
How have hedgies been trading Nine Energy Service, Inc. (NYSE:NINE)?
Heading into the fourth quarter of 2020, a total of 6 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -50% from the second quarter of 2020. The graph below displays the number of hedge funds with bullish position in NINE over the last 21 quarters. So, let’s review which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
More specifically, Adage Capital Management was the largest shareholder of Nine Energy Service, Inc. (NYSE:NINE), with a stake worth $2.2 million reported as of the end of September. Trailing Adage Capital Management was Renaissance Technologies, which amassed a stake valued at $0.3 million. Proxima Capital Management, Millennium Management, and Winton Capital Management 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 Proxima Capital Management allocated the biggest weight to Nine Energy Service, Inc. (NYSE:NINE), around 1.27% of its 13F portfolio. Zebra Capital Management is also relatively very bullish on the stock, earmarking 0.02 percent of its 13F equity portfolio to NINE.
Due to the fact that Nine Energy Service, Inc. (NYSE:NINE) has witnessed a decline in interest from the smart money, it’s safe to say that there lies a certain “tier” of funds that decided to sell off their positions entirely heading into Q4. At the top of the heap, Donald Sussman’s Paloma Partners said goodbye to the biggest position of the 750 funds watched by Insider Monkey, totaling close to $0.1 million in stock. Ken Griffin’s fund, Citadel Investment Group, also dropped its stock, about $0 million worth. These bearish behaviors are interesting, as total hedge fund interest fell by 6 funds heading into Q4.
Let’s now review hedge fund activity in other stocks – not necessarily in the same industry as Nine Energy Service, Inc. (NYSE:NINE) but similarly valued. We will take a look at Inuvo, Inc. (NYSE:INUV), SOS Limited (NYSE:SOS), Profire Energy, Inc. (NASDAQ:PFIE), Quest Resource Holding Corp (NASDAQ:QRHC), Comstock Mining, Inc. (NYSE:LODE), NetSol Technologies Inc. (NASDAQ:NTWK), and Mannatech, Inc. (NASDAQ:MTEX). This group of stocks’ market values are closest to NINE’s market value.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| INUV | 3 | 92 | 0 |
| SOS | 1 | 32 | 0 |
| PFIE | 4 | 3409 | 1 |
| QRHC | 5 | 6042 | 0 |
| LODE | 2 | 927 | 0 |
| NTWK | 3 | 4344 | -1 |
| MTEX | 1 | 841 | 0 |
| Average | 2.7 | 2241 | 0 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 2.7 hedge funds with bullish positions and the average amount invested in these stocks was $2 million. That figure was $3 million in NINE’s case. Quest Resource Holding Corp (NASDAQ:QRHC) is the most popular stock in this table. On the other hand SOS Limited (NYSE:SOS) is the least popular one with only 1 bullish hedge fund positions. Compared to these stocks Nine Energy Service, Inc. (NYSE:NINE) is more popular among hedge funds. Our overall hedge fund sentiment score for NINE is 64. 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 20 most popular stocks among hedge funds returned 41.3% in 2019 and outperformed the S&P 500 ETF (SPY) by 10 percentage points. These stocks returned 30.7% in 2020 through November 27th but still managed to beat the market by 16.1 percentage points. Hedge funds were also right about betting on NINE as the stock returned 124.8% since the end of September (through 11/27) and outperformed the market by an even larger margin. Hedge funds were clearly right about piling into this stock relative to other stocks with similar market capitalizations.
Follow Nine Energy Service Inc. (NYSE:NINE)
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Disclosure: None. This article was originally published at Insider Monkey.
