Is Flexsteel Industries, Inc. (FLXS) a Good Buy?

Is Flexsteel Industries, Inc. (NASDAQ:FLXS) a good bet right now? We like to analyze hedge fund sentiment before doing days of in-depth research. We do so because hedge funds and other elite investors have numerous Ivy league graduates, expert network advisers, and supply chain tipsters working or consulting for them. There is not a shortage of news stories covering failed hedge fund investments (for some reason media paid a ton of attention to Ackman’s gigantic JC Penney and Valeant failures) and it is a fact that hedge funds’ picks don’t beat the market 100% of the time, but their consensus picks have historically done very well and have outperformed the market after adjusting for risk.

Flexsteel Industries, Inc. (NASDAQ:FLXS) shares haven’t seen a lot of action during the third quarter. Overall, hedge fund sentiment was unchanged. The stock was in 5 hedge funds’ portfolios at the end of September. The level and the change in hedge fund popularity aren’t the only variables you need to analyze to decipher hedge funds’ perspectives. A stock may witness a boost in popularity but it may still be less popular than similarly priced stocks. That’s why at the end of this article we will examine companies such as Tokai Pharmaceuticals Inc (NASDAQ:TKAI), MCBC Holdings Inc (NASDAQ:MCFT), and Mazor Robotics Ltd – ADR (NASDAQ:MZOR) to gather more data points.

Now, we’re going to go over the latest action encompassing Flexsteel Industries, Inc. (NASDAQ:FLXS).

Hedge fund activity in Flexsteel Industries, Inc. (NASDAQ:FLXS)

Of the funds tracked by Insider Monkey, Royce & Associates, managed by Chuck Royce, holds the biggest position in Flexsteel Industries, Inc. (NASDAQ:FLXS). Royce & Associates has a $2.1 million position in the stock, comprising less than 0.1% of its 13F portfolio. Coming in second is Millennium Management, managed by Israel Englander, which holds a $0.7 million position; less than 0.1% of its 13F portfolio is allocated to the stock. Remaining hedge funds and institutional investors with similar optimism contain Cliff Asness’s AQR Capital Management, John Overdeck and David Siegel’s Two Sigma Advisors and Gavin Saitowitz and Cisco J. del Valle’s Springbok Capital.

Intriguingly, Jim Simons’s Renaissance Technologies said goodbye to the largest investment of the “upper crust” of funds followed by Insider Monkey, valued at about $0.5 million in stock. Ken Griffin’s fund, Citadel Investment Group, also dumped its stock, about $0.2 million worth. These moves are important to note, as aggregate hedge fund interest stayed the same (this is a bearish signal in our experience).

Let’s also examine hedge fund activity in other stocks similar to Flexsteel Industries, Inc. (NASDAQ:FLXS). We will take a look at Tokai Pharmaceuticals Inc (NASDAQ:TKAI), MCBC Holdings Inc (NASDAQ:MCFT), Mazor Robotics Ltd – ADR (NASDAQ:MZOR), and Fluidigm Corporation (NASDAQ:FLDM). This group of stocks’ market caps match FLXS’s market cap.

As you can see these stocks had an average of 7.75 hedge funds with bullish positions and the average amount invested in these stocks was $61 million. That figure was $3 million in FLXS’s case. Fluidigm Corporation (NASDAQ:FLDM) is the most popular stock in this table. On the other hand Mazor Robotics Ltd – ADR (NASDAQ:MZOR) is the least popular one with only 6 bullish hedge fund positions. Compared to these stocks Flexsteel Industries, Inc. (NASDAQ:FLXS) is even less popular than MZOR. Considering that hedge funds aren’t fond of this stock in relation to other companies analyzed in this article, it may be a good idea to analyze it in detail and understand why the smart money isn’t behind this stock. This isn’t necessarily bad news. Although it is possible that hedge funds may think the stock is overpriced and view the stock as a short candidate, they may not be very familiar with the bullish thesis. In either case more research is warranted.