Flotek Industries Inc (NYSE:FTK), Streamline Health Solutions Inc. (NASDAQ:STRM) and Straight Path Communications Inc (NYSEMKT:STRP) all climbed significantly last week, but do the best money managers in the world think they are strong investments? Let’s look at the data to find out.
Flotek Industries Inc (NYSE:FTK)’s shares climbed 12.94% from June 22 to June 26. In the one-month period ending on Friday last week, the stock increased by 6.74%. Flotek’s move last week, particularly on June 24, was after the company announced that it filed a Current Report on Form 8-K with the SEC due to amendments to the Company’s Senior Credit Facility with PNC Bank, which enables the firm to have more flexibility in the creation of foreign entities for more efficient operation of its international business. Meanwhile, Streamline Health Solutions Inc. (NASDAQ:STRM) also moved up last week by 12.3%. The share price growth is even steeper, at 29.52% over the one-month period ending on June 26. On June 24, Zack’s Research gave Streamline Health Solutions a top “Growth Style” score based on its financials and possible future growth. Straight Path Communications Inc (NYSEMKT:STRP), on the other hand, jumped 15.03% last week and 29.94% over the past month. Straight Path Communications reported its performance for its fiscal third quarter of 2015 that ended April 30 on June 9. The firm reported total revenues of $2.9 million and net income attributable to the company of $0.8 million.
Hedge funds and other big money managers tend to have the largest amounts of their capital invested in large and mega-cap stocks because these companies allow for much greater capital allocation. That’s why if we take a look at the most popular stocks among funds, we won’t find any mid- or small-cap stocks there. However, our backtests of hedge funds’ equity portfolios between 1999 and 2012 revealed that the 50 most popular stocks among hedge funds underperformed the market by seven basis points per month, showing that their most popular picks and the ones that received the bulk of their capital were not actually their best picks. On the other hand, their top small-cap picks performed considerably better, outperforming the market by 95 basis points per month. This was confirmed through backtesting and in forward tests of our small-cap strategy since August 2012. The strategy, which involves imitating the 15 most popular small-cap picks among hedge funds has provided gains of more than 145%, beating the broader market by over 85 percentage points through the end of April (see the details).
We at Insider Monkey also track insider sales or purchases of stocks in companies, since these tell us whether executives are confident about their firms. For Flotek Industries Inc (NYSE:FTK), there were no insider purchases of shares within the last six months. The most notable sale was by Director Carly Hardy in April, with a transaction offloading 40,500 shares. When it comes to Streamline Health Solutions Inc. (NASDAQ:STRM), there were no sales or purchases of shares by insiders in the second quarter of 2015. However, there were transactions in January. William David Sides, President and CEO, bought 10,000 shares in said month. Also in that month, Director Jonathan Phillips bought 2,460 shares, Director Judith Starkey bought 5,000 shares, Director Michael Kaplan bought 5,000 shares, Chief Financial Officer Nicholas Meeks bought 1,000 shares, Chief Marketing Officer Randolph Salisbury bought 1,000 shares, Chief People Officer Elizabeth Lois Rickard bought 2,000 shares, Chief Legal Counsel Jack William Kennedy Jr. bought 1,000 shares, and Director Eugene Robert Watson bought 2,500 shares. Director Andrew Turner, however, sold 24,960 shares in January. For Straight Path Communications Inc (NYSEMKT:STRP), Director William Weld sold 8,000 shares in March.
However, as much as Wall Street appears to be showering these three companies with love over the past month, all three had experienced a decrease in interest during the first quarter among the hedge funds monitored by Insider Monkey. Keeping this in mind, let’s take a look at the key action regarding Flotek Industries Inc (NYSE:FTK), Streamline Health Solutions Inc. (NASDAQ:STRM), and Straight Path Communications Inc (NYSEMKT:STRP).
What have hedge funds been doing with Flotek Industries Inc (NYSE:FTK), Streamline Health Solutions Inc. (NASDAQ:STRM), and Straight Path Communications Inc (NYSEMKT:STRP)?
At the end of the first quarter, a total of 13 of the hedge funds tracked by Insider Monkey were long in Flotek Industries Inc (NYSE:FTK), a 7% decrease from the fourth quarter. The total value of funds’ holdings by the end of the said period decreased 38.54% to $139 million. This is significant, since the stock only slid by 21.3% in the first quarter. Of the funds tracked by Insider Monkey, Jeffrey Gates‘ Gates Capital Management had the number one position in Flotek Industries Inc (NYSE:FTK), worth close to $80.6 million, comprising 2.8% of its total 13F portfolio. On Gates Capital Management’s heels is Millennium Management, led by Israel Englander, holding a $27.5 million position; 0.1% of its 13F portfolio is allocated to the stock. Other hedgies with similar optimism contain Paul Jasinkiewicz’s Jasinkiewicz Capital Management, William Harnisch’s Peconic Partners LLC, and Charles Paquelet’s Skylands Capital.
Also at the end of the end of the first three months of the year, a total of nine of the hedge funds tracked by Insider Monkey were bullish in Streamline Health Solutions Inc. (NASDAQ:STRM), unchanged from the fourth quarter. Total value of holdings decreased 15.06% to $13.6 million by the end of the first quarter of 2015. However, this is a slightly bullish sign, as the stock decreased 18.01% in value in the first quarter. According to hedge fund intelligence website Insider Monkey, James E. Flynn‘s Deerfield Management had the number one position in Streamline Health Solutions Inc. (NASDAQ:STRM), worth close to $6.5 million, accounting for 0.2% of its total 13F portfolio. Coming in second is Justin John Ferayorni of Tamarack Capital Management, with a $4 million position; 0.5% of its 13F portfolio is allocated to the company. Other hedgies that hold long positions contain Peter Keane’s Keane Capital Management, James Dondero’s Highland Capital Management and Jeffrey Jay and David Kroin’s Great Point Partners.
By the end of 2015’s initial quarter, a total of nine of the hedge funds tracked by Insider Monkey were also bullish in Straight Path Communications Inc (NYSEMKT:STRP), unchanged from the previous quarter. The total value of their holdings decreased by 2.94% to $16.81 million by the end of the first quarter of 2015, which was a rather bearish signal given that the stock price went up by 5.12% in the first three months of this year. Additionally, of the funds tracked by Insider Monkey, Kahn Brothers, founded by Irving Kahn, had the most valuable position in Straight Path Communications Inc (NYSEMKT:STRP), worth close to $5 million, accounting for 0.8% of its total 13F portfolio. The second-most bullish hedge fund manager is Jim Simons of Renaissance Technologies, with a $4.9 million position; the fund has less than 0.1% of its 13F portfolio invested in the stock. Remaining members of the smart money that are bullish include Eric Edidin and Josh Lobel’s Archer Capital Management, Jay Petschek and Steven Major’s Corsair Capital Management, and Glenn Russell Dubin’s Highbridge Capital Management.
Though the shares of Flotek Industries Inc (NYSE:FTK), Streamline Health Solutions Inc. (NASDAQ:STRM) and Straight Path Communications Inc (NYSEMKT:STRP) are performing well, we see that hedge funds do not seem to share the same sentiment as the market. Given these signs from the world’s smartest money managers, and the fact that there wasn’t any particularly noteworthy news that led to any of their gains last week, we’d have to conclude that these three companies are not good stocks to buy at the moment.
Disclosure: None
