In this article you are going to find out whether hedge funds think SPX FLOW, Inc. (NASDAQ:FLOW) is a good investment right now. We like to check what the smart money thinks first before doing extensive research on a given stock. Although there have been several high profile failed hedge fund picks, the consensus picks among hedge fund investors have historically outperformed the market after adjusting for known risk attributes. It's not surprising given that hedge funds have access to better information and more resources to predict the winners in the stock market.
SPX FLOW, Inc. (NASDAQ:FLOW) investors should be aware of a decrease in hedge fund interest of late. Our calculations also showed that FLOW isn't among the 30 most popular stocks among hedge funds (click for Q1 rankings and see the video for a quick look at the top 5 stocks). Video: Watch our video about the top 5 most popular hedge fund stocks.
If you'd ask most stock holders, hedge funds are perceived as worthless, old financial vehicles of yesteryear. While there are more than 8000 funds trading at the moment, Our researchers hone in on the masters of this club, around 850 funds. Most estimates calculate that this group of people manage the majority of the smart money's total capital, and by tailing their unrivaled picks, Insider Monkey has formulated several investment strategies that have historically beaten the S&P 500 index. Insider Monkey's flagship short hedge fund strategy defeated the S&P 500 short ETFs by around 20 percentage points per annum since its inception in March 2017. Our portfolio of short stocks lost 36% since February 2017 (through May 18th) even though the market was up 30% during the same period. We just shared a list of 8 short targets in our latest quarterly update .
[caption id="attachment_758429" align="aligncenter" width="400"] Ric Dillon of Diamond Hill Capital[/caption]
At Insider Monkey we scour multiple sources to uncover the next great investment idea. For example, blockchain technology's influence will go beyond online payments. So, we are checking out this futurist's moonshot opportunities in tech stocks. We interview hedge fund managers and ask them about their best ideas. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. For example we are checking out stocks recommended/scorned by legendary Bill Miller. Our best call in 2020 was shorting the market when the S&P 500 was trading at 3150 in February after realizing the coronavirus pandemic’s significance before most investors. Keeping this in mind we're going to review the new hedge fund action encompassing SPX FLOW, Inc. (NASDAQ:FLOW).
Hedge fund activity in SPX FLOW, Inc. (NASDAQ:FLOW)
At the end of the first quarter, a total of 15 of the hedge funds tracked by Insider Monkey were long this stock, a change of -6% from the previous quarter. On the other hand, there were a total of 20 hedge funds with a bullish position in FLOW a year ago. So, let's find out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
The largest stake in SPX FLOW, Inc. (NASDAQ:FLOW) was held by Impax Asset Management, which reported holding $67.6 million worth of stock at the end of September. It was followed by Diamond Hill Capital with a $29.1 million position. Other investors bullish on the company included Arrowstreet Capital, D E Shaw, and Gotham Asset Management. In terms of the portfolio weights assigned to each position Impax Asset Management allocated the biggest weight to SPX FLOW, Inc. (NASDAQ:FLOW), around 0.9% of its 13F portfolio. Diamond Hill Capital is also relatively very bullish on the stock, earmarking 0.2 percent of its 13F equity portfolio to FLOW.
Because SPX FLOW, Inc. (NASDAQ:FLOW) has faced falling interest from the smart money, logic holds that there was a specific group of fund managers that slashed their positions entirely last quarter. Intriguingly, Israel Englander's Millennium Management cut the largest investment of the 750 funds followed by Insider Monkey, worth about $10 million in stock, and Richard Driehaus's Driehaus Capital was right behind this move, as the fund said goodbye to about $9.8 million worth. These transactions are interesting, as aggregate hedge fund interest fell by 1 funds last quarter.
Let's also examine hedge fund activity in other stocks - not necessarily in the same industry as SPX FLOW, Inc. (NASDAQ:FLOW) but similarly valued. These stocks are Sunrun Inc (NASDAQ:RUN), SciPlay Corporation (NASDAQ:SCPL), 360 Finance, Inc. (NASDAQ:QFIN), and WillScot Corporation (NASDAQ:WSC). This group of stocks' market values are closest to FLOW's market value.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position RUN,24,367076,1 SCPL,17,80281,2 QFIN,3,10465,-9 WSC,28,187831,0 Average,18,161413,-1.5 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 18 hedge funds with bullish positions and the average amount invested in these stocks was $161 million. That figure was $118 million in FLOW's case. WillScot Corporation (NASDAQ:WSC) is the most popular stock in this table. On the other hand 360 Finance, Inc. (NASDAQ:QFIN) is the least popular one with only 3 bullish hedge fund positions. SPX FLOW, Inc. (NASDAQ:FLOW) is not the least popular stock in this group but hedge fund interest is still below average. Our calculations showed that top 10 most popular stocks among hedge funds returned 41.4% in 2019 and outperformed the S&P 500 ETF (SPY) by 10.1 percentage points. These stocks gained 13.3% in 2020 through June 25th but beat the market by 16.8 percentage points. A small number of hedge funds were also right about betting on FLOW, though not to the same extent, as the stock returned 20.8% during the second quarter and outperformed the market.
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Disclosure: None. This article was originally published at Insider Monkey.
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