Hedge Funds Aren’t Crazy About Flextronics International Ltd. (FLEX) Anymore

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Flextronics International Ltd. (NASDAQ:FLEX) has seen a decrease in hedge fund sentiment of late.

Flextronics International Ltd. (NASDAQ:FLEX)

To most stock holders, hedge funds are assumed to be worthless, old financial tools of the past. While there are greater than 8000 funds trading at present, we look at the elite of this group, about 450 funds. It is estimated that this group oversees the lion’s share of the smart money’s total asset base, and by keeping an eye on their highest performing investments, we have discovered 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 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 outclassed the S&P 500 index by 23.3 percentage points in 8 months (explore the details and some picks here).

Just as key, optimistic insider trading activity is another way to parse down the financial markets. There are plenty of incentives for an executive to drop shares of his or her company, but just one, very obvious reason why they would behave bullishly. Plenty of empirical studies have demonstrated the valuable potential of this tactic if you understand where to look (learn more here).

Consequently, we’re going to take a peek at the recent action surrounding Flextronics International Ltd. (NASDAQ:FLEX).

How are hedge funds trading Flextronics International Ltd. (NASDAQ:FLEX)?

Heading into Q2, a total of 19 of the hedge funds we track were bullish in this stock, a change of 0% from one quarter earlier. With hedge funds’ sentiment swirling, there exists an “upper tier” of key hedge fund managers who were increasing their holdings significantly.

According to our comprehensive database, Larry Robbins’s Glenview Capital had the most valuable position in Flextronics International Ltd. (NASDAQ:FLEX), worth close to $352.2 million, accounting for 3.7% of its total 13F portfolio. Coming in second is Thomas E. Claugus of GMT Capital, with a $128.4 million position; the fund has 2.9% of its 13F portfolio invested in the stock. Some other hedge funds with similar optimism include Cliff Asness’s AQR Capital Management, Ron Gutfleish’s Elm Ridge Capital and Curtis Macnguyen’s Ivory Capital (Investment Mgmt).

Seeing as Flextronics International Ltd. (NASDAQ:FLEX) has witnessed declining sentiment from the entirety of the hedge funds we track, it’s easy to see that there was a specific group of funds that elected to cut their positions entirely at the end of the first quarter. At the top of the heap, Jim Simons’s Renaissance Technologies said goodbye to the biggest investment of the “upper crust” of funds we monitor, valued at an estimated $17.7 million in stock., and Peter Rathjens, Bruce Clarke and John Campbell of Arrowstreet Capital was right behind this move, as the fund said goodbye to about $4.8 million worth. These moves are interesting, as total hedge fund interest stayed the same (this is a bearish signal in our experience).

How have insiders been trading Flextronics International Ltd. (NASDAQ:FLEX)?

Insider trading activity, especially when it’s bullish, is at its handiest when the company in focus has seen transactions within the past half-year. Over the latest half-year time period, Flextronics International Ltd. (NASDAQ:FLEX) has seen zero unique insiders buying, 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 Flextronics International Ltd. (NASDAQ:FLEX). These stocks are Plexus Corp. (NASDAQ:PLXS), Benchmark Electronics, Inc. (NYSE:BHE), Raven Industries, Inc. (NASDAQ:RAVN), Celestica Inc. (USA) (NYSE:CLS), and Jabil Circuit, Inc. (NYSE:JBL). This group of stocks are the members of the printed circuit boards industry and their market caps match FLEX’s market cap.

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