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In this article you are going to find out whether hedge funds think Flexion Therapeutics Inc (NASDAQ:FLXN) 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.
Is Flexion Therapeutics Inc (NASDAQ:FLXN) a buy right now? Investors who are in the know are in a bearish mood. The number of bullish hedge fund bets shrunk by 1 recently. Our calculations also showed that FLXN 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). FLXN was in 14 hedge funds' portfolios at the end of the first quarter of 2020. There were 15 hedge funds in our database with FLXN holdings at the end of the previous quarter.
Video: Watch our video about the top 5 most popular hedge fund stocks.
Today there are tons of formulas investors use to appraise stocks. Some of the less known formulas are hedge fund and insider trading signals. Our researchers have shown that, historically, those who follow the top picks of the elite money managers can beat their index-focused peers by a solid margin (see the details here).
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Mark Kingdon of Kingdon 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 let's take a look at the latest hedge fund action regarding Flexion Therapeutics Inc (NASDAQ:FLXN).
Hedge fund activity in Flexion Therapeutics Inc (NASDAQ:FLXN)
At the end of the first quarter, a total of 14 of the hedge funds tracked by Insider Monkey were long this stock, a change of -7% from the fourth quarter of 2019. The graph below displays the number of hedge funds with bullish position in FLXN over the last 18 quarters. So, let's review which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
Of the funds tracked by Insider Monkey, Bill Miller's Miller Value Partners has the number one position in Flexion Therapeutics Inc (NASDAQ:FLXN), worth close to $33.4 million, corresponding to 2.1% of its total 13F portfolio. The second largest stake is held by Mark Kingdon of Kingdon Capital, with a $7 million position; 1.3% of its 13F portfolio is allocated to the stock. Other hedge funds and institutional investors that hold long positions comprise Chuck Royce's Royce & Associates, D. E. Shaw's D E Shaw and James A. Silverman's Opaleye Management. In terms of the portfolio weights assigned to each position Miller Value Partners allocated the biggest weight to Flexion Therapeutics Inc (NASDAQ:FLXN), around 2.15% of its 13F portfolio. Kingdon Capital is also relatively very bullish on the stock, dishing out 1.28 percent of its 13F equity portfolio to FLXN.
Seeing as Flexion Therapeutics Inc (NASDAQ:FLXN) has faced bearish sentiment from the entirety of the hedge funds we track, it's safe to say that there is a sect of money managers who were dropping their full holdings last quarter. It's worth mentioning that Dmitry Balyasny's Balyasny Asset Management cut the biggest investment of all the hedgies monitored by Insider Monkey, totaling about $8.2 million in stock, and Bernard Selz's Selz Capital was right behind this move, as the fund dumped about $7 million worth. These bearish behaviors are intriguing to say the least, as total hedge fund interest was cut by 1 funds last quarter.
Let's check out hedge fund activity in other stocks - not necessarily in the same industry as Flexion Therapeutics Inc (NASDAQ:FLXN) but similarly valued. These stocks are Franklin Financial Network Inc (NYSE:FSB), Liberty Oilfield Services Inc. (NYSE:LBRT), Viomi Technology Co., Ltd (NASDAQ:VIOT), and Pfenex Inc (NYSE:PFNX). This group of stocks' market caps match FLXN's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position FSB,4,7832,0 LBRT,12,11323,-4 VIOT,5,15007,-2 PFNX,14,41255,-2 Average,8.75,18854,-2 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 8.75 hedge funds with bullish positions and the average amount invested in these stocks was $19 million. That figure was $55 million in FLXN's case. Pfenex Inc (NYSE:PFNX) is the most popular stock in this table. On the other hand Franklin Financial Network Inc (NYSE:FSB) is the least popular one with only 4 bullish hedge fund positions. Flexion Therapeutics Inc (NASDAQ:FLXN) is not the most popular stock in this group but hedge fund interest is still above 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 still beat the market by 16.8 percentage points. Hedge funds were also right about betting on FLXN as the stock returned 64.7% in Q2 (through June 25th) and outperformed the market. Hedge funds were rewarded for their relative bullishness.
Disclosure: None. This article was originally published at Insider Monkey.