Reputable billionaire investors such as Nelson Peltz and David Tepper generate exorbitant profits for their wealthy accredited investors (a minimum of $1 million in investable assets would be required to invest in a hedge fund and most successful hedge funds won’t accept your savings unless you commit at least $5 million) by pinpointing winning small-cap stocks. There is little or no publicly-available information at all on some of these small companies, which makes it hard for an individual investor to pin down a winner within the small-cap space. However, hedge funds and other big asset managers can do the due diligence and analysis for you instead, thanks to their highly-skilled research teams and vast resources to conduct an appropriate evaluation process. Looking for potential winners within the small-cap galaxy of stocks? We believe following the smart money is a good starting point.
Nabors Industries Ltd. (NYSE:NBR) has seen an increase in hedge fund sentiment lately, with 4 more hedge funds owning the stock on September 30 than did on June 30. 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 Avista Corp (NYSE:AVA), China Biologic Products Inc (NASDAQ:CBPO), and Molina Healthcare, Inc. (NYSE:MOH) to gather more data points.
Follow Nabors Industries Ltd (NYSE:NBR)
Follow Nabors Industries Ltd (NYSE:NBR)
We follow over 700 hedge funds and other institutional investors and by analyzing their quarterly 13F filings, we identify stocks that they are collectively bullish on and develop investment strategies based on this data. One strategy that outperformed the market over the last year, involves selecting the 100 best-performing funds and identifying the 30 mid-cap stocks that they are collectively most bullish on. Over the past year, this strategy generated returns of 18%, topping the 8% gain registered by S&P 500 ETFs.
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How are hedge funds trading Nabors Industries Ltd. (NYSE:NBR)?
At the end of the third quarter, a total of 30 of the hedge funds tracked by Insider Monkey held long positions in this stock, a jump of 15% from the previous quarter, returning hedge fund ownership to where it was on March 31. With hedgies’ capital changing hands, there exists a select group of notable hedge fund managers who were upping their holdings substantially (or already accumulated large positions).
When looking at the institutional investors followed by Insider Monkey, Balyasny Asset Management, run by Dmitry Balyasny, holds the number one position in Nabors Industries Ltd. (NYSE:NBR). According to regulatory filings, the fund has a $90.8 million position in the stock. On Balyasny Asset Management’s heels is Citadel Investment Group, led by Ken Griffin, holding a $33 million position. Other members of the smart money with similar optimism consist of Steve Cohen’s Point72 Asset Management, Jim Simons’ Renaissance Technologies, and Kenneth Tropin’s Graham Capital Management.
As one would reasonably expect, specific money managers have jumped into Nabors Industries Ltd. (NYSE:NBR) headfirst. Graham Capital Management initiated the most valuable position in Nabors Industries Ltd. (NYSE:NBR). The fund reportedly had $27.3 million invested in the company at the end of the quarter. Robert Polak’s Anchor Bolt Capital also made a $17.7 million investment in the stock during the quarter. The other funds with brand new NBR positions are D E Shaw, Ken Griffin’s Citadel Investment Group, and Paul Tudor Jones’ Tudor Investment Corp.
Let’s go over hedge fund activity in other stocks – not necessarily in the same industry as Nabors Industries Ltd. (NYSE:NBR) but similarly valued. These stocks are Avista Corp (NYSE:AVA), China Biologic Products Inc (NASDAQ:CBPO), Molina Healthcare, Inc. (NYSE:MOH), and PNM Resources, Inc. (NYSE:PNM). This group of stocks’ market values match NBR’s market value.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| AVA | 9 | 56026 | -3 |
| CBPO | 27 | 187425 | 4 |
| MOH | 30 | 537366 | 1 |
| PNM | 13 | 161561 | 3 |
As you can see these stocks had an average of 20 hedge funds with bullish positions and the average amount invested in these stocks was $236 million. That figure was $423 million in NBR’s case. Molina Healthcare, Inc. (NYSE:MOH) is the most popular stock in this table. On the other hand Avista Corp (NYSE:AVA) is the least popular one with only 9 bullish hedge fund positions. Nabors Industries Ltd. (NYSE:NBR) 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 MOH might be a better candidate to consider a long position in.
Disclosure: None
