Is Flowserve Corporation (NYSE:FLS) a healthy stock for your portfolio? Prominent investors are in a pessimistic mood. The number of bullish hedge fund bets dropped by 6 in recent months.
To most stock holders, hedge funds are assumed to be underperforming, old investment tools of years past. While there are more than 8000 funds in operation at present, we at Insider Monkey hone in on the elite of this club, around 450 funds. It is estimated that this group oversees the lion’s share of the smart money’s total capital, and by tracking their top investments, we have spotted a number of investment strategies that have historically beaten the market. Our small-cap hedge fund strategy outstripped the S&P 500 index by 18 percentage points per year for a decade in our back tests, and since we’ve started sharing our picks with our subscribers at the end of August 2012, we have trumped the S&P 500 index by 25 percentage points in 6.5 month (see all of our picks from August).
Equally as key, positive insider trading sentiment is a second way to parse down the investments you’re interested in. Just as you’d expect, there are a number of incentives for an executive to downsize shares of his or her company, but just one, very obvious reason why they would behave bullishly. Many academic studies have demonstrated the market-beating potential of this method if “monkeys” understand where to look (learn more here).
Now, let’s take a peek at the key action regarding Flowserve Corporation (NYSE:FLS).
How have hedgies been trading Flowserve Corporation (NYSE:FLS)?
At the end of the fourth quarter, a total of 22 of the hedge funds we track held long positions in this stock, a change of -21% from the previous quarter. With hedgies’ capital changing hands, there exists a few notable hedge fund managers who were increasing their stakes significantly.
Of the funds we track, Mario Gabelli’s GAMCO Investors had the most valuable position in Flowserve Corporation (NYSE:FLS), worth close to $168 million, accounting for 1.2% of its total 13F portfolio. Coming in second is Iridian Asset Management, managed by David Cohen and Harold Levy, which held a $67 million position; 0.2% of its 13F portfolio is allocated to the stock. Some other hedge funds that hold long positions include Martin D. Sass’s MD Sass, Jean-Marie Eveillard’s First Eagle Investment Management and Richard Breeden’s Breeden Capital Management.
Seeing as Flowserve Corporation (NYSE:FLS) has faced bearish sentiment from the entirety of the hedge funds we track, logic holds that there exists a select few hedge funds that slashed their positions entirely heading into 2013. It’s worth mentioning that Ralph V. Whitworth’s Relational Investors dumped the biggest stake of the 450+ funds we track, worth close to $327 million in stock., and Israel Englander of Millennium Management was right behind this move, as the fund dropped about $16 million worth. These transactions are interesting, as total hedge fund interest was cut by 6 funds heading into 2013.
How are insiders trading Flowserve Corporation (NYSE:FLS)?
Bullish insider trading is best served when the company in question has experienced transactions within the past six months. Over the latest half-year time frame, Flowserve Corporation (NYSE:FLS) has seen zero unique insiders buying, and 6 insider sales (see the details of insider trades here).
With the results exhibited by Insider Monkey’s research, retail investors must always watch hedge fund and insider trading activity, and Flowserve Corporation (NYSE:FLS) shareholders fit into this picture quite nicely.
Click here to learn more about Insider Monkey’s Hedge Fund Newsletter
Insider Monkey’s small-cap strategy returned 29.2% between September 2012 and February 2013 versus 8.7% for the S&P 500 index. Try it now by clicking the link above.
