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The financial regulations require hedge funds and wealthy investors that exceeded the $100 million equity holdings threshold to file a report that shows their positions at the end of every quarter. Even though it isn't the intention, these filings to a certain extent level the playing field for ordinary investors. The latest round of 13F filings disclosed the funds' positions on September 30th, about a month before the elections. We at Insider Monkey have made an extensive database of more than 817 of those established hedge funds and famous value investors' filings. In this article, we analyze how these elite funds and prominent investors traded Flexsteel Industries, Inc. (NASDAQ:FLXS) based on those filings.
Is FLXS a good stock to buy now? Flexsteel Industries, Inc. (NASDAQ:FLXS) has seen a decrease in activity from the world's largest hedge funds of late. Flexsteel Industries, Inc. (NASDAQ:FLXS) was in 9 hedge funds' portfolios at the end of September. The all time high for this statistics is 13. Our calculations also showed that FLXS isn't among the 30 most popular stocks among hedge funds (click for Q3 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.
In the eyes of most shareholders, hedge funds are assumed to be unimportant, outdated financial tools of yesteryear. While there are over 8000 funds trading today, We choose to focus on the upper echelon of this club, about 850 funds. These investment experts command bulk of all hedge funds' total asset base, and by tracking their unrivaled picks, Insider Monkey has unsheathed many investment strategies that have historically outrun the broader indices. Insider Monkey's flagship short hedge fund strategy outpaced the S&P 500 short ETFs by around 20 percentage points a year since its inception in March 2017. Our portfolio of short stocks lost 13% since February 2017 (through November 17th) even though the market was up 65% during the same period. We just shared a list of 6 short targets in our latest quarterly update .
John Overdeck of Two Sigma Advisors
At Insider Monkey we scour multiple sources to uncover the next great investment idea. For example, Federal Reserve has been creating trillions of dollars electronically to keep the interest rates near zero. We believe this will lead to inflation and boost real estate prices. So, we recommended this real estate stock to our monthly premium newsletter subscribers. We go through lists like the 15 best blue chip stocks to pick the best large-cap stocks to buy. Even though we recommend positions in only a tiny fraction of the companies we analyze, we check out as many stocks as we can. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. You can subscribe to our free daily newsletter on our website. Keeping this in mind we're going to take a glance at the latest hedge fund action surrounding Flexsteel Industries, Inc. (NASDAQ:FLXS).
Do Hedge Funds Think FLXS Is A Good Stock To Buy Now?
At the end of September, a total of 9 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -31% from the second quarter of 2020. By comparison, 7 hedge funds held shares or bullish call options in FLXS a year ago. So, let's see which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
The largest stake in Flexsteel Industries, Inc. (NASDAQ:FLXS) was held by Royce & Associates, which reported holding $24.2 million worth of stock at the end of September. It was followed by Renaissance Technologies with a $7 million position. Other investors bullish on the company included Portolan Capital Management, Two Sigma Advisors, and Arrowstreet Capital. In terms of the portfolio weights assigned to each position Portolan Capital Management allocated the biggest weight to Flexsteel Industries, Inc. (NASDAQ:FLXS), around 0.41% of its 13F portfolio. Royce & Associates is also relatively very bullish on the stock, designating 0.26 percent of its 13F equity portfolio to FLXS.
Since Flexsteel Industries, Inc. (NASDAQ:FLXS) has faced declining sentiment from the smart money, it's safe to say that there were a few hedgies who were dropping their entire stakes by the end of the third quarter. It's worth mentioning that Ali Motamed's Invenomic Capital Management said goodbye to the biggest investment of all the hedgies monitored by Insider Monkey, comprising an estimated $1.5 million in stock, and Phil Frohlich's Prescott Group Capital Management was right behind this move, as the fund dumped about $0.5 million worth. These transactions are intriguing to say the least, as total hedge fund interest dropped by 4 funds by the end of the third quarter.
Let's go over hedge fund activity in other stocks similar to Flexsteel Industries, Inc. (NASDAQ:FLXS). We will take a look at Luna Innovations Incorporated (NASDAQ:LUNA), VOXX International Corp (NASDAQ:VOXX), Ocwen Financial Corporation (NYSE:OCN), Quantum Corporation (NASDAQ:QMCO), Sify Technologies Limited (NASDAQ:SIFY), LiqTech International Inc (NASDAQ:LIQT), and Veru Inc. (NASDAQ:VERU). All of these stocks' market caps are closest to FLXS's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position LUNA,11,26088,1 VOXX,7,35232,1 OCN,8,35212,-9 QMCO,7,4792,1 SIFY,2,582,0 LIQT,2,9224,-1 VERU,7,8891,-3 Average,6.3,17146,-1.4 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 6.3 hedge funds with bullish positions and the average amount invested in these stocks was $17 million. That figure was $40 million in FLXS's case. Luna Innovations Incorporated (NASDAQ:LUNA) is the most popular stock in this table. On the other hand Sify Technologies Limited (NASDAQ:SIFY) is the least popular one with only 2 bullish hedge fund positions. Flexsteel Industries, Inc. (NASDAQ:FLXS) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for FLXS is 60.7. Stocks with higher number of hedge fund positions relative to other stocks as well as relative to their historical range receive a higher sentiment score. Our calculations showed that top 20 most popular stocks among hedge funds returned 41.3% in 2019 and outperformed the S&P 500 ETF (SPY) by 10 percentage points. These stocks gained 32.9% in 2020 through December 8th and still beat the market by 16.2 percentage points. Hedge funds were also right about betting on FLXS as the stock returned 33.9% since the end of Q3 (through 12/8) and outperformed the market. Hedge funds were rewarded for their relative bullishness.
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Disclosure: None. This article was originally published at Insider Monkey.