Out of thousands of stocks that are currently traded on the market, it is difficult to determine those that can really generate strong returns. Hedge funds and institutional investors spend millions of dollars on analysts with MBAs and PhDs, who are industry experts and well connected to other industry and media insiders on top of that. Individual investors can piggyback the hedge funds employing these talents and can benefit from their vast resources and knowledge in that way. We analyze quarterly 13F filings of over 700 hedge funds and, by looking at the smart money sentiment that surrounds a stock, we can determine whether it has potential to beat the market over the long-term. Therefore, let’s take a closer look at what smart money thinks about Mammoth Energy Services, Inc. (NASDAQ:TUSK).
Mammoth Energy Services, Inc. (NASDAQ:TUSK) investors should be aware of an increase in activity from the world’s largest hedge funds recently. Our calculations also showed that TUSK isn’t among the 30 most popular stocks among hedge funds.
Hedge funds’ reputation as shrewd investors has been tarnished in the last decade as their hedged returns couldn’t keep up with the unhedged returns of the market indices. Our research has shown that hedge funds’ small-cap stock picks managed to beat the market by double digits annually between 1999 and 2016, but the margin of outperformance has been declining in recent years. Nevertheless, we were still 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 underperformed the market by 10 percentage points annually between 2006 and 2017. Interestingly the margin of underperformance of these stocks has been increasing in recent years. Investors who are long the market and short these stocks would have returned more than 27% annually between 2015 and 2017. We have been tracking and sharing the list of these stocks since February 2017 in our quarterly newsletter.
Let’s analyze the latest hedge fund action encompassing Mammoth Energy Services, Inc. (NASDAQ:TUSK).
What have hedge funds been doing with Mammoth Energy Services, Inc. (NASDAQ:TUSK)?
At Q3’s end, a total of 20 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 5% from one quarter earlier. The graph below displays the number of hedge funds with bullish position in TUSK over the last 13 quarters. So, let’s examine which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
The largest stake in Mammoth Energy Services, Inc. (NASDAQ:TUSK) was held by Wexford Capital, which reported holding $639.9 million worth of stock at the end of September. It was followed by Millennium Management with a $13.2 million position. Other investors bullish on the company included Royce & Associates, Citadel Investment Group, and Gotham Asset Management.
As industrywide interest jumped, some big names were breaking ground themselves. GLG Partners, managed by Noam Gottesman, established the largest position in Mammoth Energy Services, Inc. (NASDAQ:TUSK). GLG Partners had $4.3 million invested in the company at the end of the quarter. D. E. Shaw’s D E Shaw also initiated a $3.2 million position during the quarter. The following funds were also among the new TUSK investors: John Overdeck and David Siegel’s Two Sigma Advisors, Sara Nainzadeh’s Centenus Global Management, and Peter Algert and Kevin Coldiron’s Algert Coldiron Investors.
Let’s go over hedge fund activity in other stocks – not necessarily in the same industry as Mammoth Energy Services, Inc. (NASDAQ:TUSK) but similarly valued. We will take a look at Tactile Systems Technology, Inc. (NASDAQ:TCMD), Third Point Reinsurance Ltd (NYSE:TPRE), WisdomTree Investments, Inc. (NASDAQ:WETF), and Benefitfocus Inc (NASDAQ:BNFT). This group of stocks’ market valuations are similar to TUSK’s market valuation.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| TCMD | 10 | 61036 | 1 |
| TPRE | 14 | 61383 | 1 |
| WETF | 12 | 69640 | 2 |
| BNFT | 12 | 68918 | 1 |
| Average | 12 | 65244 | 1.25 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 12 hedge funds with bullish positions and the average amount invested in these stocks was $65 million. That figure was $698 million in TUSK’s case. Third Point Reinsurance Ltd (NYSE:TPRE) is the most popular stock in this table. On the other hand Tactile Systems Technology, Inc. (NASDAQ:TCMD) is the least popular one with only 10 bullish hedge fund positions. Compared to these stocks Mammoth Energy Services, Inc. (NASDAQ:TUSK) is more popular among hedge funds. Considering that hedge funds are fond of this stock in relation to its market cap peers, it may be a good idea to analyze it in detail and potentially include it in your portfolio.
Disclosure: None. This article was originally published at Insider Monkey.
