Do Hedge Funds Love Nuverra Environmental Solutions Inc (NES)?

Last year we predicted the arrival of the first US recession since 2009 and we told in advance that the market will decline by at least 20% in (Recession is Imminent: We Need A Travel Ban NOW). In these volatile markets we scrutinize hedge fund filings to get a reading on which direction each stock might be going. In this article, we will take a closer look at hedge fund sentiment towards Nuverra Environmental Solutions Inc (NYSE:NES).

Nuverra Environmental Solutions Inc (NYSE:NES) was in 4 hedge funds’ portfolios at the end of the first quarter of 2021. The all time high for this statistic is 5. NES investors should pay attention to an increase in hedge fund sentiment of late. There were 3 hedge funds in our database with NES positions at the end of the fourth quarter. Our calculations also showed that NES isn’t among the 30 most popular stocks among hedge funds (click for Q1 rankings).

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 115 percentage points since March 2017 (see the details here). That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.

Jeffrey Gates of Gates Capital

At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, an activist hedge fund wants to buy this $28 biotech stock for $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 check out the latest hedge fund action encompassing Nuverra Environmental Solutions Inc (NYSE:NES).

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

Heading into the second quarter of 2021, a total of 4 of the hedge funds tracked by Insider Monkey were long this stock, a change of 33% from one quarter earlier. On the other hand, there were a total of 4 hedge funds with a bullish position in NES a year ago. With hedgies’ sentiment swirling, there exists an “upper tier” of key hedge fund managers who were boosting their stakes considerably (or already accumulated large positions).

According to publicly available hedge fund and institutional investor holdings data compiled by Insider Monkey, Jeffrey Gates’s Gates Capital Management has the largest position in Nuverra Environmental Solutions Inc (NYSE:NES), worth close to $15.2 million, corresponding to 0.6% of its total 13F portfolio. The second largest stake is held by Renaissance Technologies, holding a $0.2 million position; the fund has less than 0.1%% of its 13F portfolio invested in the stock. Remaining members of the smart money that are bullish include Israel Englander’s Millennium Management, Ken Griffin’s Citadel Investment Group and . In terms of the portfolio weights assigned to each position Gates Capital Management allocated the biggest weight to Nuverra Environmental Solutions Inc (NYSE:NES), around 0.55% of its 13F portfolio. Renaissance Technologies is also relatively very bullish on the stock, designating 0.0003 percent of its 13F equity portfolio to NES.

Now, specific money managers have jumped into Nuverra Environmental Solutions Inc (NYSE:NES) headfirst. Citadel Investment Group, managed by Ken Griffin, initiated the biggest position in Nuverra Environmental Solutions Inc (NYSE:NES). Citadel Investment Group had $0.1 million invested in the company at the end of the quarter.

Let’s now take a look at hedge fund activity in other stocks – not necessarily in the same industry as Nuverra Environmental Solutions Inc (NYSE:NES) but similarly valued. These stocks are Creatd, Inc. (NASDAQ:CRTD), Wireless Telecom Group, Inc. (NYSE:WTT), BioHiTech Global, Inc. (NASDAQ:BHTG), Phio Pharmaceuticals Corp. (NASDAQ:PHIO), Eltek Ltd. (NASDAQ:ELTK), Newater Technology, Inc. (NASDAQ:NEWA), and Paramount Gold Nevada Corp (NYSE:PZG). All of these stocks’ market caps match NES’s market cap.

View table here if you experience formatting issues.

As you can see these stocks had an average of 2 hedge funds with bullish positions and the average amount invested in these stocks was $1 million. That figure was $16 million in NES’s case. Phio Pharmaceuticals Corp. (NASDAQ:PHIO) is the most popular stock in this table. On the other hand Wireless Telecom Group, Inc. (NYSE:WTT) is the least popular one with only 1 bullish hedge fund positions. Compared to these stocks Nuverra Environmental Solutions Inc (NYSE:NES) is more popular among hedge funds. Our overall hedge fund sentiment score for NES is 80. 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 17.2% in 2021 through June 11th and still beat the market by 3.3 percentage points. Unfortunately NES wasn’t nearly as popular as these 5 stocks and hedge funds that were betting on NES were disappointed as the stock returned -2.8% since the end of the first quarter (through 6/11) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 5 most popular stocks among hedge funds as most of these stocks already outperformed the market since 2019.

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