Flex Ltd. (FLEX) Fell Out Of Favor With Hedge Funds

We at Insider Monkey have gone over 873 13F filings that hedge funds and prominent investors are required to file by the SEC. The 13F filings show the funds’ and investors’ portfolio positions as of June 30th. In this article, we look at what those funds think of Flex Ltd. (NASDAQ:FLEX) based on that data.

Is Flex Ltd. (NASDAQ:FLEX) a buy, sell, or hold? The best stock pickers were selling. The number of long hedge fund bets dropped by 5 recently. Flex Ltd. (NASDAQ:FLEX) was in 43 hedge funds’ portfolios at the end of June. The all time high for this statistic is 48. Our calculations also showed that FLEX isn’t among the 30 most popular stocks among hedge funds (click for Q2 rankings).

In the financial world there are a large number of tools investors have at their disposal to grade stocks. A pair of the most under-the-radar tools are hedge fund and insider trading indicators. We have shown that, historically, those who follow the top picks of the best fund managers can outperform the broader indices by a solid amount. Insider Monkey’s monthly stock picks returned 185.4% since March 2017 and outperformed the S&P 500 ETFs by more than 79 percentage points (see the details here). That’s why we believe hedge fund sentiment is a useful indicator that investors should pay attention to.

Scott Ferguson of Sachem Head Capital

At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, artificial intelligence is one of the fastest-growing industries right now, so we are checking out stock pitches like this emerging AI stock. We go through lists like the 10 best EV stocks to pick the next Tesla that will deliver a 10x return. 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. With all of this in mind we’re going to take a gander at the recent hedge fund action surrounding Flex Ltd. (NASDAQ:FLEX).

Do Hedge Funds Think FLEX Is A Good Stock To Buy Now?

At the end of June, a total of 43 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -10% from the first quarter of 2020. On the other hand, there were a total of 34 hedge funds with a bullish position in FLEX 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.

According to publicly available hedge fund and institutional investor holdings data compiled by Insider Monkey, Andrew Wellington and Jeff Keswin’s Lyrical Asset Management has the number one position in Flex Ltd. (NASDAQ:FLEX), worth close to $267.2 million, corresponding to 3.2% of its total 13F portfolio. Coming in second is David Cohen and Harold Levy of Iridian Asset Management, with a $239.7 million position; the fund has 4.2% of its 13F portfolio invested in the stock. Some other hedge funds and institutional investors that are bullish comprise Scott Ferguson’s Sachem Head Capital, Israel Englander’s Millennium Management and Richard S. Pzena’s Pzena Investment Management. In terms of the portfolio weights assigned to each position Shannon River Fund Management allocated the biggest weight to Flex Ltd. (NASDAQ:FLEX), around 6.09% of its 13F portfolio. Sachem Head Capital is also relatively very bullish on the stock, dishing out 4.7 percent of its 13F equity portfolio to FLEX.

Judging by the fact that Flex Ltd. (NASDAQ:FLEX) has faced a decline in interest from the smart money, it’s easy to see that there were a few funds who sold off their full holdings by the end of the second quarter. Interestingly, John Smith Clark’s Southpoint Capital Advisors cut the biggest position of the “upper crust” of funds watched by Insider Monkey, comprising close to $38.5 million in stock, and Kevin Cottrell and Chris LaSusa’s KCL Capital was right behind this move, as the fund cut about $36.6 million worth. These bearish behaviors are interesting, as aggregate hedge fund interest was cut by 5 funds by the end of the second quarter.

Let’s check out hedge fund activity in other stocks – not necessarily in the same industry as Flex Ltd. (NASDAQ:FLEX) but similarly valued. We will take a look at Commerce Bancshares, Inc. (NASDAQ:CBSH), Aegon N.V. (NYSE:AEG), West Fraser Timber Co. Ltd. (NYSE:WFG), Fiverr International Ltd. (NYSE:FVRR), WEX Inc (NYSE:WEX), Zions Bancorporation, National Association (NASDAQ:ZION), and Ralph Lauren Corporation (NYSE:RL). All of these stocks’ market caps are closest to FLEX’s market cap.

View table here if you experience formatting issues.

As you can see these stocks had an average of 21.9 hedge funds with bullish positions and the average amount invested in these stocks was $351 million. That figure was $1463 million in FLEX’s case. Ralph Lauren Corporation (NYSE:RL) is the most popular stock in this table. On the other hand Aegon N.V. (NYSE:AEG) is the least popular one with only 6 bullish hedge fund positions. Compared to these stocks Flex Ltd. (NASDAQ:FLEX) is more popular among hedge funds. Our overall hedge fund sentiment score for FLEX is 76.9. 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 22.9% in 2021 through October 1st and still managed to beat the market by 5.6 percentage points. Hedge funds were also right about betting on FLEX, though not to the same extent, as the stock returned 2% since the end of June (through October 1st) and outperformed the market as well.

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Disclosure: None. This article was originally published at Insider Monkey.