Hedge Funds Are Buying NexTier Oilfield Solutions Inc. (NEX)

Hedge Funds and other institutional investors have just completed filing their 13Fs with the Securities and Exchange Commission, revealing their equity portfolios as of the end of June. At Insider Monkey, we follow nearly 900 active hedge funds and notable investors and by analyzing their 13F filings, we can determine the stocks that they are collectively bullish on. One of their picks is NexTier Oilfield Solutions Inc. (NYSE:NEX), so let’s take a closer look at the sentiment that surrounds it in the current quarter.

Is NexTier Oilfield Solutions Inc. (NYSE:NEX) a bargain? Investors who are in the know were betting on the stock. The number of long hedge fund positions advanced by 1 lately. NexTier Oilfield Solutions Inc. (NYSE:NEX) was in 24 hedge funds’ portfolios at the end of the second quarter of 2021. The all time high for this statistic is 29. Our calculations also showed that NEX isn’t among the 30 most popular stocks among hedge funds (click for Q2 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 79 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.

Stephen Feinberg of Cerberus Capital Management

At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, lithium mining is one of the fastest growing industries right now, so we are checking out stock pitches like this emerging lithium stock. We go through lists like the 10 best EV 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. Keeping this in mind let’s check out the new hedge fund action encompassing NexTier Oilfield Solutions Inc. (NYSE:NEX).

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

At second quarter’s end, a total of 24 of the hedge funds tracked by Insider Monkey were long this stock, a change of 4% from the first quarter of 2020. Below, you can check out the change in hedge fund sentiment towards NEX over the last 24 quarters. With hedgies’ sentiment swirling, there exists a few key hedge fund managers who were boosting their holdings substantially (or already accumulated large positions).

More specifically, Cerberus Capital Management was the largest shareholder of NexTier Oilfield Solutions Inc. (NYSE:NEX), with a stake worth $150.8 million reported as of the end of June. Trailing Cerberus Capital Management was Pzena Investment Management, which amassed a stake valued at $45.9 million. Renaissance Technologies, Fisher Asset Management, and Glendon 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 Elm Ridge Capital allocated the biggest weight to NexTier Oilfield Solutions Inc. (NYSE:NEX), around 3.83% of its 13F portfolio. Cerberus Capital Management is also relatively very bullish on the stock, designating 3.48 percent of its 13F equity portfolio to NEX.

As aggregate interest increased, specific money managers were breaking ground themselves. Intrinsic Edge Capital, managed by Mark Coe, established the most valuable position in NexTier Oilfield Solutions Inc. (NYSE:NEX). Intrinsic Edge Capital had $2.3 million invested in the company at the end of the quarter. Matthew Hulsizer’s PEAK6 Capital Management also made a $0.4 million investment in the stock during the quarter. The other funds with new positions in the stock are Peter Muller’s PDT Partners, Ryan Tolkin (CIO)’s Schonfeld Strategic Advisors, and Brandon Haley’s Holocene Advisors.

Let’s go over hedge fund activity in other stocks – not necessarily in the same industry as NexTier Oilfield Solutions Inc. (NYSE:NEX) but similarly valued. We will take a look at GreenSky, Inc. (NASDAQ:GSKY), UMH Properties, Inc (NYSE:UMH), Tactile Systems Technology, Inc. (NASDAQ:TCMD), Viad Corp (NYSE:VVI), Tecnoglass Inc. (NASDAQ:TGLS), Benchmark Electronics, Inc. (NYSE:BHE), and John B. Sanfilippo & Son, Inc. (NASDAQ:JBSS). All of these stocks’ market caps are closest to NEX’s market cap.

View table here if you experience formatting issues.

As you can see these stocks had an average of 11.6 hedge funds with bullish positions and the average amount invested in these stocks was $57 million. That figure was $270 million in NEX’s case. GreenSky, Inc. (NASDAQ:GSKY) is the most popular stock in this table. On the other hand Tactile Systems Technology, Inc. (NASDAQ:TCMD) is the least popular one with only 9 bullish hedge fund positions. Compared to these stocks NexTier Oilfield Solutions Inc. (NYSE:NEX) is more popular among hedge funds. Our overall hedge fund sentiment score for NEX is 80.8. 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 24% in 2021 through October 22nd and still beat the market by 1.6 percentage points. Unfortunately NEX wasn’t nearly as popular as these 5 stocks and hedge funds that were betting on NEX were disappointed as the stock returned 1.1% since the end of the second quarter (through 10/22) 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.

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