After several tireless days we have finished crunching the numbers from the more than 700 13F filings issued by the elite hedge funds and other investment firms that we track at Insider Monkey, which disclosed those firms’ equity portfolios as of September 30. The results of that effort will be put on display in this article, as we share valuable insight into the smart money sentiment towards Precision Drilling Corp (NYSE:PDS).
Is Precision Drilling Corp (NYSE:PDS) undervalued? Prominent investors are reducing their bets on the stock. The number of long hedge fund bets were cut by 1 lately. Our calculations also showed that pds isn’t among the 30 most popular stocks among hedge funds.
Why do we pay any attention at all to hedge fund sentiment? Our research has shown that hedge funds’ large-cap stock picks indeed failed to beat the market between 1999 and 2016. However, we were able to identify in advance a select group of hedge fund holdings that outperformed the market by 18 percentage points since May 2014 through December 3, 2018 (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 24% through December 3, 2018. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
We’re going to go over the latest hedge fund action surrounding Precision Drilling Corp (NYSE:PDS).
What have hedge funds been doing with Precision Drilling Corp (NYSE:PDS)?
At the end of the third quarter, a total of 15 of the hedge funds tracked by Insider Monkey were long this stock, a change of -6% from one quarter earlier. Below, you can check out the change in hedge fund sentiment towards PDS over the last 13 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, Lonestar Capital Management was the largest shareholder of Precision Drilling Corp (NYSE:PDS), with a stake worth $15.6 million reported as of the end of September. Trailing Lonestar Capital Management was Mountain Lake Investment Management, which amassed a stake valued at $9.7 million. Citadel Investment Group, Sirios Capital Management, and Contrarian Capital were also very fond of the stock, giving the stock large weights in their portfolios.
Seeing as Precision Drilling Corp (NYSE:PDS) has faced falling interest from the aggregate hedge fund industry, we can see that there exists a select few hedge funds that elected to cut their entire stakes by the end of the third quarter. Interestingly, Israel Englander’s Millennium Management sold off the biggest position of the “upper crust” of funds followed by Insider Monkey, totaling an estimated $3.4 million in stock, and Noam Gottesman’s GLG Partners was right behind this move, as the fund cut about $1.8 million worth. These moves are important to note, as aggregate hedge fund interest dropped by 1 funds by the end of the third quarter.
Let’s now review hedge fund activity in other stocks – not necessarily in the same industry as Precision Drilling Corp (NYSE:PDS) but similarly valued. We will take a look at ScanSource, Inc. (NASDAQ:SCSC), Universal Health Realty Income Trust (NYSE:UHT), Bandwidth Inc. (NASDAQ:BAND), and Himax Technologies, Inc. (NASDAQ:HIMX). This group of stocks’ market values resemble PDS’s market value.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| SCSC | 8 | 57637 | -2 |
| UHT | 4 | 39397 | 2 |
| BAND | 16 | 114344 | 4 |
| HIMX | 10 | 29789 | -4 |
| Average | 9.5 | 60292 | 0 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 9.5 hedge funds with bullish positions and the average amount invested in these stocks was $60 million. That figure was $47 million in PDS’s case. Bandwidth Inc. (NASDAQ:BAND) is the most popular stock in this table. On the other hand Universal Health Realty Income Trust (NYSE:UHT) is the least popular one with only 4 bullish hedge fund positions. Precision Drilling Corp (NYSE:PDS) is not the most popular stock in this group but hedge fund interest is still above average. This is a slightly positive signal but we’d rather spend our time researching stocks that hedge funds are piling on. In this regard BAND might be a better candidate to consider a long position.
Disclosure: None. This article was originally published at Insider Monkey.
