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Hedge Funds Aren’t Done Buying FLIR Systems, Inc. (FLIR)

The latest 13F reporting period has come and gone, and Insider Monkey have plowed through 823 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 June 30th, when the S&P 500 Index was trading around the 3100 level. Since the end of March, investors decided to bet on the economic recovery and a stock market rebound. S&P 500 Index returned more than 50% since its bottom. In this article you are going to find out whether hedge funds thought FLIR Systems, Inc. (NASDAQ:FLIR) was a good investment heading into the third quarter and how the stock traded in comparison to the top hedge fund picks.

FLIR Systems, Inc. (NASDAQ:FLIR) investors should be aware of an increase in activity from the world’s largest hedge funds recently. FLIR Systems, Inc. (NASDAQ:FLIR) was in 38 hedge funds’ portfolios at the end of June. The all time high for this statistics is 34. This means the bullish number of hedge fund positions in this stock currently sits at its all time high. There were 34 hedge funds in our database with FLIR holdings at the end of March. Our calculations also showed that FLIR isn’t among the 30 most popular stocks among hedge funds (click for Q2 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.

Why do we pay any attention at all to hedge fund sentiment? Our research has shown that a select group of hedge fund holdings outperformed the S&P 500 ETFs by 56 percentage points since March 2017 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that’ll significantly underperform the market. We have been tracking and sharing the list of these stocks since February 2017 and they lost 34% through August 17th. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.

Chuck Royce

Chuck Royce of Royce & Associates

At Insider Monkey we scour multiple sources to uncover the next great investment idea. For example, Federal Reserve has been creating trillions of dollars electronically to keep the interest rates near zero. We believe this will lead to inflation and boost precious metals prices. So, we are checking out this junior gold mining stock. Legal marijuana is one of the fastest growing industries right now, so we are checking out stock pitches like “the Starbucks of cannabis” to identify the next tenbagger. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. We go through lists like the 10 most profitable companies in the world to pick the best large-cap stocks to buy. Even though we recommend positions in only a tiny fraction of the companies we analyze, we check out as many stocks as we can. Keeping this in mind let’s take a look at the latest hedge fund action regarding FLIR Systems, Inc. (NASDAQ:FLIR).

What does smart money think about FLIR Systems, Inc. (NASDAQ:FLIR)?

At Q2’s end, a total of 38 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 12% from the previous quarter. On the other hand, there were a total of 20 hedge funds with a bullish position in FLIR a year ago. So, let’s find out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

Is FLIR A Good Stock To Buy?

Of the funds tracked by Insider Monkey, Brian Ashford-Russell and Tim Woolley’s Polar Capital has the number one position in FLIR Systems, Inc. (NASDAQ:FLIR), worth close to $53.5 million, amounting to 0.5% of its total 13F portfolio. The second largest stake is held by Peter Rathjens, Bruce Clarke and John Campbell of Arrowstreet Capital, with a $47.6 million position; the fund has 0.1% of its 13F portfolio invested in the stock. Remaining professional money managers that are bullish encompass Chuck Royce’s Royce & Associates, Israel Englander’s Millennium Management and Steve Cohen’s Point72 Asset Management. In terms of the portfolio weights assigned to each position Tenzing Global Investors allocated the biggest weight to FLIR Systems, Inc. (NASDAQ:FLIR), around 3.29% of its 13F portfolio. Prospector Partners is also relatively very bullish on the stock, setting aside 1.78 percent of its 13F equity portfolio to FLIR.

Now, key money managers have jumped into FLIR Systems, Inc. (NASDAQ:FLIR) headfirst. Tenzing Global Investors, managed by Chet Kapoor, assembled the biggest position in FLIR Systems, Inc. (NASDAQ:FLIR). Tenzing Global Investors had $6.7 million invested in the company at the end of the quarter. Michel Massoud’s Melqart Asset Management also made a $6.6 million investment in the stock during the quarter. The following funds were also among the new FLIR investors: George McCabe’s Portolan Capital Management, Seth Cogswell’s Running Oak Capital, and Richard Chilton’s Chilton Investment Company.

Let’s go over hedge fund activity in other stocks similar to FLIR Systems, Inc. (NASDAQ:FLIR). These stocks are Axalta Coating Systems Ltd (NYSE:AXTA), Nielsen Holdings plc (NYSE:NLSN), Comerica Incorporated (NYSE:CMA), PLDT Inc. (NYSE:PHI), Ralph Lauren Corporation (NYSE:RL), Ares Management Corp (NYSE:ARES), and Churchill Downs Incorporated (NASDAQ:CHDN). This group of stocks’ market values resemble FLIR’s market value.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
AXTA 47 1340214 -2
NLSN 31 1177115 -2
CMA 36 423590 3
PHI 5 85702 -2
RL 25 499671 -1
ARES 20 448658 4
CHDN 25 470037 -6
Average 27 634998 -0.9

View table here if you experience formatting issues.

As you can see these stocks had an average of 27 hedge funds with bullish positions and the average amount invested in these stocks was $635 million. That figure was $292 million in FLIR’s case. Axalta Coating Systems Ltd (NYSE:AXTA) is the most popular stock in this table. On the other hand PLDT Inc. (NYSE:PHI) is the least popular one with only 5 bullish hedge fund positions. FLIR Systems, Inc. (NASDAQ:FLIR) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for FLIR is 78.3. Stocks with higher number of hedge fund positions relative to other stocks as well as relative to their historical range receive a higher sentiment score. This is a slightly positive signal but we’d rather spend our time researching stocks that hedge funds are piling on. 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 33% in 2020 through the end of August and beat the market by 23.2 percentage points. Unfortunately FLIR wasn’t nearly as popular as these 10 stocks and hedge funds that were betting on FLIR were disappointed as the stock returned -8.6% during the same time period and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 10 most popular stocks among hedge funds as many of these stocks already outperformed the market so far this year.

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