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Last year we predicted the arrival of the first US recession since 2009 and we told in advance that the market will decline by at least 20% in (Recession is Imminent: We Need A Travel Ban NOW). In these volatile markets we scrutinize hedge fund filings to get a reading on which direction each stock might be going. In this article, we will take a closer look at hedge fund sentiment towards SPX FLOW, Inc. (NYSE:FLOW).
Is SPX FLOW, Inc. (NYSE:FLOW) the right pick for your portfolio? Money managers were turning bullish. The number of bullish hedge fund positions advanced by 4 recently. SPX FLOW, Inc. (NYSE:FLOW) was in 16 hedge funds' portfolios at the end of March. The all time high for this statistic is 24. Our calculations also showed that FLOW isn't among the 30 most popular stocks among hedge funds (click for Q1 rankings). There were 12 hedge funds in our database with FLOW holdings at the end of December.
Hedge funds' reputation as shrewd investors has been tarnished in the last decade as their hedged returns couldn't keep up with the unhedged returns of the market indices. Hedge funds have more than $3.5 trillion in assets under management, so you can't expect their entire portfolios to beat the market by large margins. Our research was able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by more than 115 percentage points since March 2017 (see the details here). So you can still find a lot of gems by following hedge funds' moves today.
Gavin Saitowitz of Prelude Capital
At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, pet market is growing at a 7% annual rate and is expected to reach $110 billion in 2021. So, we are checking out the 5 best stocks for animal lovers. We go through lists like the 15 best Jim Cramer stocks to identify the next Tesla that will deliver outsized returns. 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 homepage. Keeping this in mind we're going to take a glance at the fresh hedge fund action surrounding SPX FLOW, Inc. (NYSE:FLOW).
Do Hedge Funds Think FLOW Is A Good Stock To Buy Now?
At the end of March, a total of 16 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 33% from one quarter earlier. The graph below displays the number of hedge funds with bullish position in FLOW over the last 23 quarters. With hedgies' capital changing hands, there exists an "upper tier" of key hedge fund managers who were boosting their holdings considerably (or already accumulated large positions).
Among these funds, Impax Asset Management held the most valuable stake in SPX FLOW, Inc. (NYSE:FLOW), which was worth $108.9 million at the end of the fourth quarter. On the second spot was Diamond Hill Capital which amassed $43.2 million worth of shares. Arrowstreet Capital, Citadel Investment Group, and Renaissance Technologies were also very fond of the stock, becoming one of the largest hedge fund holders of the company. In terms of the portfolio weights assigned to each position Impax Asset Management allocated the biggest weight to SPX FLOW, Inc. (NYSE:FLOW), around 0.56% of its 13F portfolio. Quantinno Capital is also relatively very bullish on the stock, setting aside 0.55 percent of its 13F equity portfolio to FLOW.
As one would reasonably expect, key money managers were leading the bulls' herd. ExodusPoint Capital, managed by Michael Gelband, created the most outsized position in SPX FLOW, Inc. (NYSE:FLOW). ExodusPoint Capital had $1.1 million invested in the company at the end of the quarter. Robert Vincent McHugh's Jade Capital Advisors also initiated a $1 million position during the quarter. The other funds with new positions in the stock are Israel Englander's Millennium Management, Gavin Saitowitz and Cisco J. del Valle's Prelude Capital (previously Springbok Capital), and Cliff Asness's AQR Capital Management.
Let's go over hedge fund activity in other stocks - not necessarily in the same industry as SPX FLOW, Inc. (NYSE:FLOW) but similarly valued. We will take a look at Broadstone Net Lease, Inc. (NYSE:BNL), Main Street Capital Corporation (NYSE:MAIN), Sunoco LP (NYSE:SUN), Surgery Partners, Inc. (NASDAQ:SGRY), Plexus Corp. (NASDAQ:PLXS), SVMK Inc. (NASDAQ:SVMK), and SPX Corporation (NYSE:SPXC). 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 BNL,9,26568,-2 MAIN,10,33906,3 SUN,2,821,-1 SGRY,10,139528,-5 PLXS,14,75816,-3 SVMK,32,204010,0 SPXC,11,40999,-2 Average,12.6,74521,-1.4 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 12.6 hedge funds with bullish positions and the average amount invested in these stocks was $75 million. That figure was $194 million in FLOW's case. SVMK Inc. (NASDAQ:SVMK) is the most popular stock in this table. On the other hand Sunoco LP (NYSE:SUN) is the least popular one with only 2 bullish hedge fund positions. SPX FLOW, Inc. (NYSE:FLOW) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for FLOW is 52.3. 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 5 most popular stocks among hedge funds returned 95.8% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 40 percentage points. These stocks gained 28.5% in 2021 through July 23rd and still beat the market by 10.1 percentage points. Hedge funds were also right about betting on FLOW, though not to the same extent, as the stock returned 20.4% since Q1 (through July 23rd) and outperformed the market as well.
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Disclosure: None. This article was originally published at Insider Monkey.