Is Dril-Quip, Inc. (DRQ) A Good Stock To Buy?

The elite funds run by legendary investors such as Dan Loeb and David Tepper make hundreds of millions of dollars for themselves and their investors by spending enormous resources doing research on small cap stocks that big investment banks don’t follow. Because of their pay structures, they have strong incentive to do the research necessary to beat the market. That’s why we pay close attention to what they think in small cap stocks. In this article, we take a closer look at Dril-Quip, Inc. (NYSE:DRQ) from the perspective of those elite funds.

Dril-Quip, Inc. (NYSE:DRQ) shareholders have witnessed an increase in support from the world’s most elite money managers in recent months, with hedge fund ownership rising by 3 funds. The level and the change in hedge fund popularity aren’t the only variables you need to analyze to decipher hedge funds’ perspectives. A stock may witness a boost in popularity but it may still be less popular than similarly priced stocks. That’s why at the end of this article we will examine companies such as Terex Corporation (NYSE:TEX), Rowan Companies PLC (NYSE:RDC), and Cavium Inc (NASDAQ:CAVM) to gather more data points.

At Insider Monkey, we’ve developed an investment strategy that has delivered market-beating returns over the past 12 months. Our strategy identifies the 100 best-performing funds of the previous quarter from among the collection of 700+ successful funds that we track in our database, which we accomplish using our returns methodology. We then study the portfolios of those 100 funds using the latest 13F data to uncover the 30 most popular mid-cap stocks (market caps of between $1 billion and $10 billion) among them to hold until the next filing period. This strategy delivered 18% gains over the past 12 months, more than doubling the 8% returns enjoyed by the S&P 500 ETFs.

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How have hedgies been trading Dril-Quip, Inc. (NYSE:DRQ)?

At Q3’s end, a total of 24 of the hedge funds tracked by Insider Monkey were bullish on this stock, a 14% increase from the previous quarter, erasing the decline during the second quarter. With the smart money’s capital changing hands, there exists a select group of notable hedge fund managers who were boosting their stakes substantially (or already accumulated large positions).

Of the funds tracked by Insider Monkey, Cliff Asness’ AQR Capital Management has the most valuable position in Dril-Quip, Inc. (NYSE:DRQ), worth close to $26.7 million. The second most bullish fund manager is Marshall Wace LLP, led by Paul Marshall and Ian Wace, holding a $23.8 million call position. Some other members of the smart money with similar optimism contain Ken Fisher’s Fisher Asset Management, Jim Simons’ Renaissance Technologies and Joel Greenblatt’s Gotham Asset Management.