Here is What Hedge Funds Think About C&J Energy Services Inc (CJES)

The worries about the economic slowdown in China and the ongoing uncertainty about the path of interest-rate increases triggered several waves of equity sell-offs during the third quarter. Of course, most hedge funds and other asset managers had to stomach substantial losses during the bloody three-month period, which might have caused some to consider fleeing the U.S. equity markets. Interestingly, smaller-cap stocks registered higher losses than large-capitalization stocks during the September quarter, suggesting that institutional investors heavily discarded seemingly riskier equities amid high uncertainty and turmoil. In fact, the Russell 2000 Index lost 11.9% in the third quarter, while the Standard and Poor’s 500 benchmark declined a mere 6.4%. This article will lay out and discuss the hedge fund and institutional investor sentiment towards C&J Energy Services Inc (NYSE:CJES).

Is C&J Energy Services Inc a splendid investment now? Prominent investors are taking a bearish view. The number of long hedge fund positions were trimmed by 1 recently. CJES was in 19 hedge funds’ portfolios at the end of the third quarter of 2015. There were 20 hedge funds in our database with CJES holdings at the end of the previous quarter. At the end of this article we will also compare CJES to other stocks, including Century Communities, Inc (NYSE:CCS), Patriot National Inc (NYSE:PN), and Carrols Restaurant Group, Inc. (NASDAQ:TAST) to get a better sense of its popularity.

If you’d ask most market participants, hedge funds are seen as unimportant, outdated investment tools of years past. While there are greater than 8000 funds with their doors open at the moment, our experts choose to focus on the bigwigs of this group, approximately 700 funds. Most estimates calculate that this group of people control most of the smart money’s total asset base, and by watching their first-class picks, Insider Monkey has formulated numerous investment strategies that have historically outstripped the market. Insider Monkey’s small-cap hedge fund strategy outrun the S&P 500 index by 12 percentage points a year for a decade in their back tests.

With all of this in mind, let’s check out the new action encompassing C&J Energy Services Inc (NYSE:CJES).

What have hedge funds been doing with C&J Energy Services Inc (NYSE:CJES)?

Heading into Q4, a total of 19 of the hedge funds tracked by Insider Monkey held long positions in this stock, a drop of 5% from the previous quarter. With the smart money’s positions undergoing their usual ebb and flow, there exists a select group of noteworthy hedge fund managers who were boosting their holdings substantially (or already accumulated large positions).

When looking at the institutional investors followed by Insider Monkey, Alyeska Investment Group, managed by Anand Parekh, holds the largest position in C&J Energy Services Inc (NYSE:CJES). The fund has a $31.6 million position in the stock, comprising 0.4% of its 13F portfolio. The second largest stake is held by Citadel Investment Group, managed by Ken Griffin, which holds a $7 million position; the fund has less than 0.1% of its 13F portfolio invested in the stock. Remaining peers that hold long positions contain Jim Simons’s Renaissance Technologies, David Nierenberg’s Nierenberg Investment Management and Brian Taylor’s Pine River Capital Management.

Judging by the fact that C&J Energy Services Inc (NYSE:CJES) has faced bearish sentiment from hedge fund managers, we can see that there lies a certain “tier” of hedgies who were dropping their full holdings last quarter. It’s worth mentioning that Kyle Bass’s Hayman Advisors sold off the biggest position of the “upper crust” of funds watched by Insider Monkey, valued at an estimated $17.3 million in stock, and Sander Gerber of Hudson Bay Capital Management was right behind this move, as the fund said goodbye to about $10.6 million worth of stock. These transactions are intriguing to say the least, as total hedge fund interest fell by 1 funds last quarter.

Let’s check out hedge fund activity in other stocks – not necessarily in the same industry as C&J Energy Services Inc (NYSE:CJES) but similarly valued. We will take a look at Century Communities, Inc (NYSE:CCS), Patriot National Inc (NYSE:PN), Carrols Restaurant Group, Inc. (NASDAQ:TAST), and Intrepid Potash, Inc. (NYSE:IPI). This group of stocks’ market values are closest to CJES’s market value.

As you can see these stocks had an average of 16 hedge funds with bullish positions and the average amount invested in these stocks was $63 million. That figure was $68 million in CJES’s case, a positive sign. Carrols Restaurant Group, Inc. (NASDAQ:TAST) is the most popular stock in this table, while Patriot National Inc (NYSE:PN) is the laggard with only 6 bullish hedge fund positions. C&J Energy Services Inc (NYSE:CJES) is not the most popular stock in this group, but hedge fund interest is still above average. While this is a slightly positive signal, we’d rather spend our time researching stocks that hedge funds are piling on. Since TAST outperforms CJES in every metric, it might be a better candidate to consider a long position.