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Hedge Funds Are Selling Franklin Electric Co. (FELE)

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It seems that the masses and most of the financial media hate hedge funds and what they do, but why is this hatred of hedge funds so prominent? At the end of the day, these asset management firms do not gamble the hard-earned money of the people who are on the edge of poverty. Truth be told, most hedge fund managers and other smaller players within this industry are very smart and skilled investors. Of course, they may also make wrong bets in some instances, but no one knows what the future holds and how market participants will react to the bountiful news that floods in each day. The S&P 500 Index gained 7.6% in the 12 month-period that ended November 21, while less than 49% of its stocks beat the benchmark. In contrast, the 30 most popular mid-cap stocks among the top hedge fund investors tracked by the Insider Monkey team returned 18% over the same period, which provides evidence that these money managers do have great stock picking abilities. That’s why we believe it isn’t a waste of time to check out hedge fund sentiment before you invest in a stock like Franklin Electric Co. (NASDAQ:FELE).

Franklin Electric Co. (NASDAQ:FELE) has seen a decrease in hedge fund interest in recent months. FELE was in 8 hedge funds’ portfolios at the end of September. There were 11 hedge funds in our database with FELE holdings at the end of the previous quarter. At the end of this article we will also compare FELE to other stocks including G&K Services Inc (NASDAQ:GK), Advanced Energy Industries, Inc. (NASDAQ:AEIS), and Lexicon Pharmaceuticals, Inc. (NASDAQ:LXRX) to get a better sense of its popularity.

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We care about hedge fund sentiment because historically hedge funds’ stock picks delivered strong risk adjusted returns. There are certain segments of the market where hedge funds’ stock picks performed much better than its benchmarks. For instance, the 30 most popular mid-cap stocks among the best performing hedge funds returned 18% over the last 12 months outpacing S&P 500 Index by more than 10 percentage points. We developed this strategy 2.5 years ago and started sharing its picks in our quarterly newsletter. It bested the S&P 500 Index ETFs by delivering a solid 39% vs. 22% gain for its benchmarks.

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How have hedgies been trading Franklin Electric Co. (NASDAQ:FELE)?

Heading into the fourth quarter of 2016, a total of 8 of the hedge funds tracked by Insider Monkey were bullish on this stock, down by 27% from the previous quarter. On the other hand, there were a total of 15 hedge funds with a bullish position in FELE at the beginning of this year. So, let’s see which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

HedgeFundSentimentChart

According to publicly available hedge fund and institutional investor holdings data compiled by Insider Monkey, Chuck Royce’s Royce & Associates has the number one position in Franklin Electric Co. (NASDAQ:FELE), worth close to $51.8 million. The second largest stake is held by Impax Asset Management, led by Ian Simm, holding a $48 million position; the fund has 2.2% of its 13F portfolio invested in the stock. Some other hedge funds and institutional investors that are bullish encompass Mario Gabelli’s GAMCO Investors, Jeffrey Bronchick’s Cove Street Capital and Michael Platt and William Reeves’ BlueCrest Capital Mgmt. We should note that Impax Asset Management is among our list of the 100 best performing hedge funds which is based on the performance of their 13F long positions in non-microcap stocks.

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