There are several ways to beat the market, and investing in small cap stocks has historically been one of them. We like to improve the odds of beating the market further by examining what famous hedge fund operators such as Carl Icahn and George Soros think. Those hedge fund operators make billions of dollars each year by hiring the best and the brightest to do research on stocks, including small cap stocks that big brokerage houses simply don’t cover. Because of Carl Icahn and other elite funds’ exemplary historical records, we pay attention to their small cap picks. In this article, we use hedge fund filing data to analyze Basic Energy Services, Inc (NYSE:BAS).
Is Basic Energy Services, Inc a buy, sell, or hold? The best stock pickers are getting less optimistic. The number of bullish hedge fund positions were trimmed by 5 in recent months. At the end of this article we will also compare BAS to other stocks, including Republic First Bancorp, Inc. (NASDAQ:FRBK), Nordic American Offshore Ltd (NYSE:NAO), and QLT Inc. (USA) (NASDAQ:QLTI) to get a better sense of its popularity.
Follow Basic Energy Services Inc. (NYSE:BASX)
Follow Basic Energy Services Inc. (NYSE:BASX)
To most stock holders, hedge funds are seen as underperforming, outdated investment tools of the past. While there are over 8000 funds with their doors open at the moment, Our experts hone in on the aristocrats of this club, about 700 funds. It is estimated that this group of investors oversee the lion’s share of all hedge funds’ total asset base, and by keeping an eye on their first-class equity investments, Insider Monkey has discovered several investment strategies that have historically beaten Mr. Market. Insider Monkey’s small-cap hedge fund strategy outrun the S&P 500 index by 12 percentage points annually for a decade in their back tests.
Keeping this in mind, let’s take a glance at the latest action encompassing Basic Energy Services, Inc (NYSE:BAS).
How have hedgies been trading Basic Energy Services, Inc (NYSE:BAS)?
At the end of the third quarter, a total of 10 of the hedge funds tracked by Insider Monkey were long this stock, a change of -33% from the second quarter. With hedgies’ capital changing hands, there exists a few notable hedge fund managers who were increasing their holdings substantially (or already accumulated large positions).
According to publicly available hedge fund and institutional investor holdings data compiled by Insider Monkey, Fine Capital Partners, managed by Debra Fine, holds the number one position in Basic Energy Services, Inc (NYSE:BAS). Fine Capital Partners has a $14 million position in the stock, comprising 1.4% of its 13F portfolio. The second largest stake is held by Alyeska Investment Group, managed by Anand Parekh, which holds a $9.9 million position; the fund has 0.1% of its 13F portfolio invested in the stock. Some other members of the smart money that are bullish include Ken Griffin’s Citadel Investment Group, Israel Englander’s Millennium Management and Brian Taylor’s Pine River Capital Management.
Judging by the fact that Basic Energy Services, Inc (NYSE:BAS) has experienced declining sentiment from the smart money, logic holds that there is a sect of hedgies that elected to cut their positions entirely heading into Q4. At the top of the heap, Malcolm Fairbairn’s Ascend Capital sold off the biggest investment of all the hedgies followed by Insider Monkey, valued at about $12.6 million in stock, and Dmitry Balyasny’s Balyasny Asset Management was right behind this move, as the fund said goodbye to about $9.7 million worth. These transactions are intriguing to say the least, as total hedge fund interest was cut by 5 funds heading into Q4.
Let’s now take a look at hedge fund activity in other stocks similar to Basic Energy Services, Inc (NYSE:BAS). We will take a look at Republic First Bancorp, Inc. (NASDAQ:FRBK), Nordic American Offshore Ltd (NYSE:NAO), QLT Inc. (USA) (NASDAQ:QLTI), and Twin Disc, Incorporated (NASDAQ:TWIN). This group of stocks’ market values are closest to BAS’s market value.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| FRBK | 5 | 17072 | -1 |
| NAO | 5 | 35678 | 0 |
| QLTI | 19 | 59657 | -2 |
| TWIN | 7 | 13111 | 0 |
As you can see these stocks had an average of 9 hedge funds with bullish positions and the average amount invested in these stocks was $31 million, compared to $33 million in BAS’s case. QLT Inc. (USA) (NASDAQ:QLTI) is the most popular stock in this table. On the other hand Republic First Bancorp, Inc. (NASDAQ:FRBK) is the least popular one with only 5 bullish hedge fund positions. Basic Energy Services, Inc (NYSE:BAS) 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 QLTI might be a better candidate to consider a long position.
