Hedge Funds Are Souring On Omega Flex, Inc. (OFLX)

The latest 13F reporting period has come and gone, and Insider Monkey is again at the forefront when it comes to making use of this gold mine of data. We at Insider Monkey have plowed through 821 13F filings that hedge funds and well-known value investors are required to file by the SEC. The 13F filings show the funds’ and investors’ portfolio positions as of March 31st, a week after the market trough. In this article we look at what those investors think of Omega Flex, Inc. (NASDAQ:OFLX).

Omega Flex, Inc. (NASDAQ:OFLX) was in 3 hedge funds’ portfolios at the end of the first quarter of 2020. OFLX has seen a decrease in support from the world’s most elite money managers recently. There were 6 hedge funds in our database with OFLX positions at the end of the previous quarter. Our calculations also showed that OFLX isn’t among the 30 most popular stocks among hedge funds (click for Q1 rankings and see the video for a quick look at the top 5 stocks).

Video: Watch our video about the top 5 most popular hedge fund stocks.

According to most traders, hedge funds are perceived as slow, old investment tools of the past. While there are greater than 8000 funds with their doors open today, We choose to focus on the elite of this club, about 850 funds. These hedge fund managers control the majority of all hedge funds’ total capital, and by monitoring their highest performing equity investments, Insider Monkey has formulated numerous investment strategies that have historically defeated the market. Insider Monkey’s flagship short hedge fund strategy outperformed the S&P 500 short ETFs by around 20 percentage points per annum since its inception in March 2017. Our portfolio of short stocks lost 36% since February 2017 (through May 18th) even though the market was up 30% during the same period. We just shared a list of 8 short targets in our latest quarterly update .


Cliff Asness of AQR Capital Management

At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, legendary investor Bill Miller told investors to sell 7 extremely popular recession stocks last month. So, we went through his list and recommended another stock with 100% upside potential instead. We interview hedge fund managers and ask them about their best ideas. You can watch our latest hedge fund manager interview here and find out the name of the large-cap healthcare stock that Sio Capital’s Michael Castor expects to double. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. Our best call in 2020 was shorting the market when S&P 500 was trading at 3150 after realizing the coronavirus pandemic’s significance before most investors. Keeping this in mind we’re going to review the new hedge fund action regarding Omega Flex, Inc. (NASDAQ:OFLX).

What does smart money think about Omega Flex, Inc. (NASDAQ:OFLX)?

At the end of the first quarter, a total of 3 of the hedge funds tracked by Insider Monkey were long this stock, a change of -50% from the previous quarter. Below, you can check out the change in hedge fund sentiment towards OFLX over the last 18 quarters. With the smart money’s sentiment swirling, there exists a few notable hedge fund managers who were adding to their holdings considerably (or already accumulated large positions).

More specifically, Renaissance Technologies was the largest shareholder of Omega Flex, Inc. (NASDAQ:OFLX), with a stake worth $3.1 million reported as of the end of September. Trailing Renaissance Technologies was AQR Capital Management, which amassed a stake valued at $0.2 million. Royce & Associates was also very fond of the stock, becoming one of the largest hedge fund holders of the company. In terms of the portfolio weights assigned to each position Renaissance Technologies allocated the biggest weight to Omega Flex, Inc. (NASDAQ:OFLX), around 0.003% of its 13F portfolio. Royce & Associates is also relatively very bullish on the stock, earmarking 0.0005 percent of its 13F equity portfolio to OFLX.

Judging by the fact that Omega Flex, Inc. (NASDAQ:OFLX) has experienced declining sentiment from hedge fund managers, it’s easy to see that there is a sect of money managers that elected to cut their entire stakes heading into Q4. It’s worth mentioning that Michael Gelband’s ExodusPoint Capital dropped the largest position of the “upper crust” of funds monitored by Insider Monkey, comprising close to $0.4 million in stock. Donald Sussman’s fund, Paloma Partners, also dropped its stock, about $0.4 million worth. These bearish behaviors are important to note, as total hedge fund interest fell by 3 funds heading into Q4.

Let’s also examine hedge fund activity in other stocks similar to Omega Flex, Inc. (NASDAQ:OFLX). We will take a look at Adient plc (NYSE:ADNT), Provident Financial Services, Inc. (NYSE:PFS), Virtusa Corporation (NASDAQ:VRTU), and PBF Energy Inc (NYSE:PBF). This group of stocks’ market valuations are similar to OFLX’s market valuation.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
ADNT 32 204928 -4
PFS 12 26202 -4
VRTU 13 35689 -1
PBF 22 70769 -10
Average 19.75 84397 -4.75

View table here if you experience formatting issues.

As you can see these stocks had an average of 19.75 hedge funds with bullish positions and the average amount invested in these stocks was $84 million. That figure was $3 million in OFLX’s case. Adient plc (NYSE:ADNT) is the most popular stock in this table. On the other hand Provident Financial Services, Inc. (NYSE:PFS) is the least popular one with only 12 bullish hedge fund positions. Compared to these stocks Omega Flex, Inc. (NASDAQ:OFLX) is even less popular than PFS. Hedge funds clearly dropped the ball on OFLX as the stock delivered strong returns, though hedge funds’ consensus picks still generated respectable returns. Our calculations showed that top 10 most popular stocks among hedge funds returned 41.4% in 2019 and outperformed the S&P 500 ETF (SPY) by 10.1 percentage points. These stocks gained 7.9% in 2020 through May 22nd and still beat the market by 15.6 percentage points. A small number of hedge funds were also right about betting on OFLX as the stock returned 24.2% so far in the second quarter and outperformed the market by an even larger margin.

Disclosure: None. This article was originally published at Insider Monkey.