Precision Drilling Corp (USA) (PDS): Hedge Funds Aren’t Crazy About It, Insider Sentiment Unchanged

If you were to ask many of your fellow readers, hedge funds are seen as useless, old investment vehicles of an era lost to time. Although there are more than 8,000 hedge funds in operation currently, this site looks at the aristocrats of this group, around 525 funds. Analysts calculate that this group controls most of the hedge fund industry’s total capital, and by monitoring their highest performing investments, we’ve identified a number of investment strategies that have historically outstripped the market. Our small-cap hedge fund strategy beat the S&P 500 index by 18 percentage points per year for a decade in our back tests, and since we’ve started sharing our picks with our subscribers at the end of August 2012, we have trumped the S&P 500 index by 33 percentage points in 11 months (explore the details and some picks here).

Equally as necessary, bullish insider trading activity is another way to analyze the investments you’re interested in. Obviously, there are many motivations for an insider to drop shares of his or her company, but just one, very simple reason why they would initiate a purchase. Many empirical studies have demonstrated the market-beating potential of this strategy if piggybackers understand where to look (learn more here).

Thus, let’s discuss the newest info surrounding Precision Drilling Corp (USA) (NYSE:PDS).

What does the smart money think about Precision Drilling Corp (USA) (NYSE:PDS)?

In preparation for the third quarter, a total of 8 of the hedge funds we track were bullish in this stock, a change of -27% from the first quarter. With hedge funds’ capital changing hands, there exists a select group of notable hedge fund managers who were boosting their holdings significantly.

Out of the hedge funds we follow, Third Avenue Management, managed by Martin Whitman, holds the largest position in Precision Drilling Corp (USA) (NYSE:PDS). Third Avenue Management has a $24 million position in the stock, comprising 0.5% of its 13F portfolio. On Third Avenue Management’s heels is Chuck Royce of Royce & Associates, with a $5.2 million position; less than 0.1%% of its 13F portfolio is allocated to the company. Other hedgies that hold long positions include Matthew Hulsizer’s PEAK6 Capital Management, Eric Sprott’s Sprott Asset Management and D. E. Shaw’s D E Shaw.

Judging by the fact that Precision Drilling Corp (USA) (NYSE:PDS) has experienced declining interest from the top-tier hedge fund industry, we can see that there were a few money managers that elected to cut their entire stakes in Q1. Intriguingly, Daniel Bubis’s Tetrem Capital Management said goodbye to the largest position of the “upper crust” of funds we track, worth an estimated $59.2 million in stock. Jim Simons’s fund, Renaissance Technologies, also cut its stock, about $2 million worth. These moves are interesting, as total hedge fund interest dropped by 3 funds in Q1.

How have insiders been trading Precision Drilling Corp (USA) (NYSE:PDS)?

Bullish insider trading is best served when the primary stock in question has seen transactions within the past half-year. Over the last 180-day time frame, Precision Drilling Corp (USA) (NYSE:PDS) has experienced zero unique insiders purchasing, and zero insider sales (see the details of insider trades here).

We’ll check out the relationship between both of these indicators in other stocks similar to Precision Drilling Corp (USA) (NYSE:PDS). These stocks are CARBO Ceramics Inc. (NYSE:CRR), Energy XXI (Bermuda) Limited (NASDAQ:EXXI), Lufkin Industries, Inc. (NASDAQ:LUFK), Helix Energy Solutions Group Inc. (NYSE:HLX), and Forum Energy Technologies Inc (NYSE:FET). This group of stocks are in the oil & gas equipment & services industry and their market caps match PDS’s market cap.

Using the returns shown by the previously mentioned studies, average investors must always track hedge fund and insider trading activity, and Precision Drilling Corp (USA) (NYSE:PDS) is an important part of this process.

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