Hedge Funds Have Never Been This Bullish On SPX FLOW, Inc. (FLOW)

In this article we are going to use hedge fund sentiment as a tool and determine whether SPX FLOW, Inc. (NYSE:FLOW) is a good investment right now. We like to analyze hedge fund sentiment before conducting 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 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.

SPX FLOW, Inc. (NYSE:FLOW) has seen an increase in enthusiasm from smart money in recent months. SPX FLOW, Inc. (NYSE:FLOW) was in 27 hedge funds’ portfolios at the end of September. The all time high for this statistic was previously 24. This means the bullish number of hedge fund positions in this stock currently sits at its all time high. There were 14 hedge funds in our database with FLOW holdings at the end of June. Our calculations also showed that FLOW isn’t among the 30 most popular stocks among hedge funds (click for Q3 rankings).

At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, lithium prices have more than doubled over the past year, so we go through lists like the 10 best EV stocks to pick the next Tesla that will deliver a 10x return. Even though we recommend positions in only a tiny fraction of the companies we analyze, we check out as many stocks as we can. Now we’re going to review the recent hedge fund action encompassing SPX FLOW, Inc. (NYSE:FLOW).

Do Hedge Funds Think FLOW Is A Good Stock To Buy Now?

At the end of September, a total of 27 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 93% from the previous quarter. The graph below displays the number of hedge funds with bullish position in FLOW over the last 25 quarters. With the smart money’s sentiment swirling, there exists a select group of key hedge fund managers who were increasing their stakes substantially (or already accumulated large positions).

More specifically, Impax Asset Management was the largest shareholder of SPX FLOW, Inc. (NYSE:FLOW), with a stake worth $129.8 million reported as of the end of September. Trailing Impax Asset Management was TIG Advisors, which amassed a stake valued at $31.9 million. Segantii Capital, Millennium Management, and Harbert Management were 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 Litespeed Management allocated the biggest weight to SPX FLOW, Inc. (NYSE:FLOW), around 8.19% of its 13F portfolio. Harbert Management is also relatively very bullish on the stock, setting aside 6.49 percent of its 13F equity portfolio to FLOW.

With a general bullishness amongst the heavyweights, key hedge funds have jumped into SPX FLOW, Inc. (NYSE:FLOW) headfirst. TIG Advisors, managed by Carl Tiedemann and Michael Tiedemann, initiated the most outsized position in SPX FLOW, Inc. (NYSE:FLOW). TIG Advisors had $31.9 million invested in the company at the end of the quarter. Simon Sadler’s Segantii Capital also made a $31.7 million investment in the stock during the quarter. The other funds with new positions in the stock are Raymond J. Harbert’s Harbert Management, Matthew Halbower’s Pentwater Capital Management, and Traci Lerner’s Chescapmanager LLC.

Let’s also examine hedge fund activity in other stocks – not necessarily in the same industry as SPX FLOW, Inc. (NYSE:FLOW) but similarly valued. We will take a look at California Water Service Group (NYSE:CWT), Texas Capital Bancshares Inc (NASDAQ:TCBI), Intra-Cellular Therapies Inc (NASDAQ:ITCI), Corporate Office Properties Trust (NYSE:OFC), Nelnet, Inc. (NYSE:NNI), ABM Industries, Inc. (NYSE:ABM), and Vroom, Inc. (NASDAQ:VRM). This group of stocks’ market caps match FLOW’s market cap.

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As you can see these stocks had an average of 18.6 hedge funds with bullish positions and the average amount invested in these stocks was $167 million. That figure was $336 million in FLOW’s case. Texas Capital Bancshares Inc (NASDAQ:TCBI) is the most popular stock in this table. On the other hand California Water Service Group (NYSE:CWT) is the least popular one with only 11 bullish hedge fund positions. SPX FLOW, Inc. (NYSE:FLOW) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for FLOW is 78.1. 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. Our calculations showed that top 5 most popular stocks among hedge funds returned 95.8% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 40 percentage points. These stocks gained 31.1% in 2021 through December 9th and still beat the market by 5.1 percentage points. Hedge funds were also right about betting on FLOW as the stock returned 16.2% since the end of Q3 (through 12/9) and outperformed the market. Hedge funds were rewarded for their relative bullishness.

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