Is FLEX Stock A Buy or Sell?

Hedge funds and large money managers usually invest with a focus on the long-term horizon and, therefore, short-lived dips or bumps on the charts usually don’t make them change their opinion towards a company. This time it may be different. The coronavirus pandemic destroyed the high correlations among major industries and asset classes. We are now in a stock pickers market where fundamentals of a stock have more effect on the price than the overall direction of the market. As a result we observe sudden and large changes in hedge fund positions depending on the news flow. Let’s take a look at the hedge fund sentiment towards Flex Ltd. (NASDAQ:FLEX) to find out whether there were any major changes in hedge funds’ views.

Is FLEX stock a buy or sell? The best stock pickers were in an optimistic mood. The number of bullish hedge fund positions inched up by 17 lately. Flex Ltd. (NASDAQ:FLEX) was in 44 hedge funds’ portfolios at the end of the fourth quarter of 2020. The all time high for this statistic is 34. This means the bullish number of hedge fund positions in this stock currently sits at its all time high. Our calculations also showed that FLEX isn’t among the 30 most popular stocks among hedge funds (click for Q4 rankings). There were 27 hedge funds in our database with FLEX positions at the end of the third quarter.

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Mark Kingdon - Kingdon Capital

Mark Kingdon of Kingdon Capital

At Insider Monkey we leave no stone unturned when looking for the next great investment idea. Recently Oregon became the first state to legalize psychedelic mushrooms which are shown to have promising results in treating depression, addiction, and PTSD in early stage academic studies. So, we are checking out this psychedelic drug stock idea right now. We go through lists like the 10 best biotech stocks to invest in to pick the next stock 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. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. You can subscribe to our free daily newsletter on our homepage (or at the end of this article). Keeping this in mind we’re going to go over the latest hedge fund action regarding Flex Ltd. (NASDAQ:FLEX).

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

At fourth quarter’s end, a total of 44 of the hedge funds tracked by Insider Monkey were long this stock, a change of 63% from one quarter earlier. The graph below displays the number of hedge funds with bullish position in FLEX over the last 22 quarters. With hedge funds’ capital changing hands, there exists a few key hedge fund managers who were boosting their holdings significantly (or already accumulated large positions).

The largest stake in Flex Ltd. (NASDAQ:FLEX) was held by Lyrical Asset Management, which reported holding $297.8 million worth of stock at the end of December. It was followed by Iridian Asset Management with a $253 million position. Other investors bullish on the company included Sachem Head Capital, Pzena Investment Management, and Shannon River Fund Management. In terms of the portfolio weights assigned to each position Nishkama Capital allocated the biggest weight to Flex Ltd. (NASDAQ:FLEX), around 10.6% of its 13F portfolio. Shannon River Fund Management is also relatively very bullish on the stock, dishing out 7.85 percent of its 13F equity portfolio to FLEX.

Consequently, specific money managers have jumped into Flex Ltd. (NASDAQ:FLEX) headfirst. Park West Asset Management, managed by Peter S. Park, assembled the biggest position in Flex Ltd. (NASDAQ:FLEX). Park West Asset Management had $52.7 million invested in the company at the end of the quarter. Josh Resnick’s Jericho Capital Asset Management also initiated a $46.9 million position during the quarter. The other funds with brand new FLEX positions are Mark Kingdon’s Kingdon Capital, Michael A. Price and Amos Meron’s Empyrean Capital Partners, and Suraj Parkash Chopra’s Force Hill Capital Management.

Let’s now take a look at hedge fund activity in other stocks – not necessarily in the same industry as Flex Ltd. (NASDAQ:FLEX) but similarly valued. We will take a look at Newell Brands Inc. (NASDAQ:NWL), Pinnacle West Capital Corporation (NYSE:PNW), WEX Inc (NYSE:WEX), Store Capital Corporation (NYSE:STOR), Neurocrine Biosciences, Inc. (NASDAQ:NBIX), Ascendis Pharma A/S (NASDAQ:ASND), and AMERCO (NASDAQ:UHAL). All of these stocks’ market caps are closest to FLEX’s market cap.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
NWL 23 1529633 -4
PNW 24 331462 2
WEX 26 422739 0
STOR 12 862680 -8
NBIX 31 936476 -7
ASND 31 2830045 2
UHAL 21 540146 2
Average 24 1064740 -1.9

View table here if you experience formatting issues.

As you can see these stocks had an average of 24 hedge funds with bullish positions and the average amount invested in these stocks was $1065 million. That figure was $1373 million in FLEX’s case. Neurocrine Biosciences, Inc. (NASDAQ:NBIX) is the most popular stock in this table. On the other hand Store Capital Corporation (NYSE:STOR) is the least popular one with only 12 bullish hedge fund positions. Compared to these stocks Flex Ltd. (NASDAQ:FLEX) is more popular among hedge funds. Our overall hedge fund sentiment score for FLEX is 90. 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 30 most popular stocks among hedge funds returned 81.2% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 26 percentage points. These stocks gained 5.3% in 2021 through March 19th and still beat the market by 0.8 percentage points. Unfortunately FLEX wasn’t nearly as popular as these 30 stocks and hedge funds that were betting on FLEX were disappointed as the stock returned -2.9% since the end of the fourth quarter (through 3/19) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 30 most popular stocks among hedge funds as most of these stocks already outperformed the market since 2019.

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