Tesco Corporation (USA) (TESO): Are Hedge Funds Right About This Stock?

Tesco Corporation (USA) (NASDAQ:TESO) was in 13 hedge funds’ portfolio at the end of March. TESO has seen a decrease in activity from the world’s largest hedge funds recently. There were 14 hedge funds in our database with TESO holdings at the end of the previous quarter.

In the eyes of most stock holders, hedge funds are seen as slow, old investment tools of yesteryear. While there are greater than 8000 funds with their doors open today, we at Insider Monkey look at the upper echelon of this club, close to 450 funds. It is widely believed that this group oversees the majority of the smart money’s total capital, and by paying attention to their best stock picks, we have uncovered a few investment strategies that have historically outstripped the market. Our small-cap hedge fund strategy outpaced the S&P 500 index by 18 percentage points a 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 23.3 percentage points in 8 months (see all of our picks from August).

Just as integral, bullish insider trading sentiment is another way to break down the investments you’re interested in. There are a number of incentives for an executive to sell shares of his or her company, but only one, very clear reason why they would buy. Several empirical studies have demonstrated the useful potential of this strategy if “monkeys” understand what to do (learn more here).

Now, let’s take a glance at the key action surrounding Tesco Corporation (USA) (NASDAQ:TESO).

Hedge fund activity in Tesco Corporation (USA) (NASDAQ:TESO)

Heading into Q2, a total of 13 of the hedge funds we track were long in this stock, a change of -7% from one quarter earlier. With hedge funds’ capital changing hands, there exists an “upper tier” of key hedge fund managers who were upping their holdings meaningfully.

When looking at the hedgies we track, Chuck Royce’s Royce & Associates had the largest position in Tesco Corporation (USA) (NASDAQ:TESO), worth close to $45.2 million, accounting for 0.1% of its total 13F portfolio. Sitting at the No. 2 spot is Cliff Asness of AQR Capital Management, with a $8.6 million position; less than 0.1%% of its 13F portfolio is allocated to the stock. Remaining peers with similar optimism include Israel Englander’s Millennium Management, John Overdeck and David Siegel’s Two Sigma Advisors and D. E. Shaw’s D E Shaw.

Since Tesco Corporation (USA) (NASDAQ:TESO) has experienced bearish sentiment from the entirety of the hedge funds we track, it’s safe to say that there lies a certain “tier” of fund managers that decided to sell off their positions entirely heading into Q2. Intriguingly, Dmitry Balyasny’s Balyasny Asset Management said goodbye to the largest investment of the “upper crust” of funds we monitor, worth about $16.3 million in stock.. Donald Yacktman’s fund, Yacktman Asset Management, also dropped its stock, about $2 million worth. These moves are important to note, as aggregate hedge fund interest fell by 1 funds heading into Q2.

What have insiders been doing with Tesco Corporation (USA) (NASDAQ:TESO)?

Insider purchases made by high-level executives is at its handiest when the company in focus has experienced transactions within the past six months. Over the latest six-month time frame, Tesco Corporation (USA) (NASDAQ:TESO) has seen zero unique insiders buying, and 3 insider sales (see the details of insider trades here).

Let’s also examine hedge fund and insider activity in other stocks similar to Tesco Corporation (USA) (NASDAQ:TESO). These stocks are TETRA Technologies, Inc. (NYSE:TTI), Newpark Resources Inc (NYSE:NR), Synergy Resources Corp (NYSEAMEX:SYRG), Basic Energy Services, Inc (NYSE:BAS), and Willbros Group Inc (NYSE:WG). This group of stocks are the members of the oil & gas equipment & services industry and their market caps are closest to TESO’s market cap.

With the results exhibited by the aforementioned time-tested strategies, retail investors should always pay attention to hedge fund and insider trading activity, and Tesco Corporation (USA) (NASDAQ:TESO) applies perfectly to this mantra.

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