Is Dril-Quip, Inc. (NYSE:DRQ) a good stock to buy right now? We at Insider Monkey like to examine what billionaires and hedge funds think of a company before doing days of research on it. Given their 2 and 20 payment structure, hedge funds have more incentives and resources than the average investor. The funds have access to expert networks and get tips from industry insiders. They also have numerous Ivy League graduates and MBAs. Like everyone else, hedge funds perform miserably at times, but their consensus picks have historically outperformed the market after risk adjustments.
Is Dril-Quip, Inc. (NYSE:DRQ) a good stock to buy now? Prominent investors are taking a pessimistic view. The number of bullish hedge fund positions went down by 2 recently. Our calculations also showed that drq isn’t among the 30 most popular stocks among hedge funds.
According to most stock holders, hedge funds are assumed to be unimportant, old investment vehicles of years past. While there are more than 8000 funds in operation at the moment, Our experts look at the bigwigs of this club, about 750 funds. It is estimated that this group of investors administer the lion’s share of the smart money’s total capital, and by observing their best picks, Insider Monkey has unearthed a number of investment strategies that have historically beaten the market. Insider Monkey’s flagship hedge fund strategy exceeded the S&P 500 index by around 5 percentage points annually since its inception in May 2014 through June 18th. We were able to generate large returns even by identifying short candidates. Our portfolio of short stocks lost 28.2% since February 2017 (through June 18th) even though the market was up nearly 30% during the same period. We just shared a list of 5 short targets in our latest quarterly update and they are already down an average of 8.2% in a month whereas our long picks outperformed the market by 2.5 percentage points in this volatile 5 week period (our long picks also beat the market by 15 percentage points so far this year).
We’re going to take a look at the latest hedge fund action regarding Dril-Quip, Inc. (NYSE:DRQ).
What does smart money think about Dril-Quip, Inc. (NYSE:DRQ)?
At Q1’s end, a total of 17 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -11% from the previous quarter. Below, you can check out the change in hedge fund sentiment towards DRQ over the last 15 quarters. So, let’s examine which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
Among these funds, Fisher Asset Management held the most valuable stake in Dril-Quip, Inc. (NYSE:DRQ), which was worth $51 million at the end of the first quarter. On the second spot was GAMCO Investors which amassed $28.7 million worth of shares. Moreover, Citadel Investment Group, Arrowstreet Capital, and Birch Run Capital were also bullish on Dril-Quip, Inc. (NYSE:DRQ), allocating a large percentage of their portfolios to this stock.
Due to the fact that Dril-Quip, Inc. (NYSE:DRQ) has faced a decline in interest from the aggregate hedge fund industry, it’s easy to see that there is a sect of money managers who sold off their entire stakes last quarter. Interestingly, Thiru Ramakrishnan’s TVR Capital said goodbye to the largest investment of the “upper crust” of funds watched by Insider Monkey, worth close to $6.3 million in stock, and Sara Nainzadeh’s Centenus Global Management was right behind this move, as the fund sold off about $3 million worth. These bearish behaviors are important to note, as aggregate hedge fund interest dropped by 2 funds last quarter.
Let’s now take a look at hedge fund activity in other stocks – not necessarily in the same industry as Dril-Quip, Inc. (NYSE:DRQ) but similarly valued. These stocks are Brinker International, Inc. (NYSE:EAT), WestAmerica Bancorp. (NASDAQ:WABC), Pacific Premier Bancorp, Inc. (NASDAQ:PPBI), and Hope Bancorp, Inc. (NASDAQ:HOPE). All of these stocks’ market caps are closest to DRQ’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| EAT | 29 | 252843 | 3 |
| WABC | 6 | 10495 | 1 |
| PPBI | 11 | 87156 | 2 |
| HOPE | 14 | 71200 | -3 |
| Average | 15 | 105424 | 0.75 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 15 hedge funds with bullish positions and the average amount invested in these stocks was $105 million. That figure was $142 million in DRQ’s case. Brinker International, Inc. (NYSE:EAT) is the most popular stock in this table. On the other hand WestAmerica Bancorp. (NASDAQ:WABC) is the least popular one with only 6 bullish hedge fund positions. Dril-Quip, Inc. (NYSE:DRQ) 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. Our calculations showed that top 20 most popular stocks among hedge funds returned 6.2% in Q2 through June 19th and outperformed the S&P 500 ETF (SPY) by nearly 3 percentage points. Unfortunately DRQ wasn’t nearly as popular as these 20 stocks and hedge funds that were betting on DRQ were disappointed as the stock returned -4.8% during the same period and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 20 most popular stocks among hedge funds as 13 of these stocks already outperformed the market so far in Q2.
Disclosure: None. This article was originally published at Insider Monkey.
