Is Flotek Industries Inc (FTK) Going to Burn These Hedge Funds?

Flotek Industries Inc (NYSE:FTK) was in 12 hedge funds’ portfolio at the end of March. FTK shareholders have witnessed a decrease in support from the world’s most elite money managers lately. There were 12 hedge funds in our database with FTK positions at the end of the previous quarter.

If you’d ask most traders, hedge funds are seen as unimportant, outdated investment tools of years past. While there are over 8000 funds with their doors open today, we hone in on the upper echelon of this group, around 450 funds. Most estimates calculate that this group has its hands on the lion’s share of the hedge fund industry’s total asset base, and by monitoring their top equity investments, we have deciphered a few investment strategies that have historically outperformed the S&P 500 index. Our small-cap hedge fund strategy outperformed the S&P 500 index by 18 percentage points per annum for a decade in our back tests, and since we’ve began to sharing our picks with our subscribers at the end of August 2012, we have topped the S&P 500 index by 23.3 percentage points in 8 months (explore the details and some picks here).

Equally as beneficial, positive insider trading activity is a second way to break down the investments you’re interested in. There are plenty of stimuli for an executive to get rid of shares of his or her company, but only one, very clear reason why they would initiate a purchase. Plenty of academic studies have demonstrated the impressive potential of this tactic if “monkeys” know where to look (learn more here).

Consequently, it’s important to take a gander at the latest action surrounding Flotek Industries Inc (NYSE:FTK).

What does the smart money think about Flotek Industries Inc (NYSE:FTK)?

Heading into Q2, a total of 12 of the hedge funds we track held long positions in this stock, a change of 0% from one quarter earlier. With the smart money’s capital changing hands, there exists a few notable hedge fund managers who were increasing their holdings meaningfully.

According to our comprehensive database, Jeffrey Gates’s Gates Capital Management had the biggest position in Flotek Industries Inc (NYSE:FTK), worth close to $59.5 million, accounting for 3.1% of its total 13F portfolio. On Gates Capital Management’s heels is Peconic Partners LLC, managed by William Harnisch, which held a $41.2 million position; 6.4% of its 13F portfolio is allocated to the stock. Remaining hedgies that hold long positions include Israel Englander’s Millennium Management, Drew Cupps’s Cupps Capital Management and Richard Driehaus’s Driehaus Capital.

Since Flotek Industries Inc (NYSE:FTK) has experienced a declination in interest from the smart money, logic holds that there is a sect of hedge funds who were dropping their positions entirely at the end of the first quarter. Interestingly, Gregory Fraser, Rudolph Kluiber, and Timothy Krochuk’s GRT Capital Partners dumped the largest position of all the hedgies we watch, totaling an estimated $0.5 million in stock., and Matthew Hulsizer of PEAK6 Capital Management was right behind this move, as the fund dumped about $0 million worth. These moves are important to note, as total hedge fund interest stayed the same (this is a bearish signal in our experience).

Insider trading activity in Flotek Industries Inc (NYSE:FTK)

Bullish insider trading is particularly usable when the primary stock in question has experienced transactions within the past half-year. Over the last six-month time period, Flotek Industries Inc (NYSE:FTK) has experienced zero unique insiders purchasing, and 3 insider sales (see the details of insider trades here).

Let’s also examine hedge fund and insider activity in other stocks similar to Flotek Industries Inc (NYSE:FTK). These stocks are Koppers Holdings Inc. (NYSE:KOP), WD-40 Company (NASDAQ:WDFC), Kraton Performance Polymers Inc (NYSE:KRA), OM Group, Inc. (NYSE:OMG), and Quaker Chemical Corp (NYSE:KWR). This group of stocks belong to the specialty chemicals industry and their market caps are closest to FTK’s market cap.

With the returns shown by Insider Monkey’s strategies, everyday investors must always keep an eye on hedge fund and insider trading activity, and Flotek Industries Inc (NYSE:FTK) shareholders fit into this picture quite nicely.

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