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. Insider Monkey finished processing 817 13F filings submitted by hedge funds and prominent investors. These filings show these funds’ portfolio positions as of September 30th, 2020. In this article we are going to take a look at smart money sentiment towards Flotek Industries Inc (NYSE:FTK).
Is FTK a good stock to buy now? Flotek Industries Inc (NYSE:FTK) investors should pay attention to a decrease in hedge fund sentiment recently. Flotek Industries Inc (NYSE:FTK) was in 13 hedge funds’ portfolios at the end of September. The all time high for this statistic is 18. There were 14 hedge funds in our database with FTK holdings at the end of June. Our calculations also showed that FTK isn’t among the 30 most popular stocks among hedge funds (click for Q3 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.
In the financial world there are a large number of tools investors have at their disposal to grade stocks. A pair of the most under-the-radar tools are hedge fund and insider trading indicators. We have shown that, historically, those who follow the top picks of the best fund managers can outperform the broader indices by a solid amount. Insider Monkey’s monthly stock picks returned 113% since March 2017 and outperformed the S&P 500 ETFs by more than 66 percentage points. Our short strategy outperformed the S&P 500 short ETFs by 20 percentage points annually (see the details here). That’s why we believe hedge fund sentiment is a useful indicator that investors should pay attention to.
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 real estate prices. So, we recommended this real estate stock to our monthly premium newsletter subscribers. We go through lists like the 15 best blue chip stocks 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. 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 website. Now we’re going to review the fresh hedge fund action surrounding Flotek Industries Inc (NYSE:FTK).
Do Hedge Funds Think FTK Is A Good Stock To Buy Now?
Heading into the fourth quarter of 2020, a total of 13 of the hedge funds tracked by Insider Monkey were long this stock, a change of -7% from the previous quarter. By comparison, 10 hedge funds held shares or bullish call options in FTK a year ago. So, let’s check out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
The largest stake in Flotek Industries Inc (NYSE:FTK) was held by Newtyn Management, which reported holding $13.3 million worth of stock at the end of September. It was followed by Masters Capital Management with a $6.8 million position. Other investors bullish on the company included Rutabaga Capital Management, D E Shaw, and Renaissance Technologies. In terms of the portfolio weights assigned to each position Newtyn Management allocated the biggest weight to Flotek Industries Inc (NYSE:FTK), around 3.23% of its 13F portfolio. Rutabaga Capital Management is also relatively very bullish on the stock, dishing out 1.76 percent of its 13F equity portfolio to FTK.
Seeing as Flotek Industries Inc (NYSE:FTK) has witnessed declining sentiment from the entirety of the hedge funds we track, we can see that there exists a select few funds that decided to sell off their entire stakes in the third quarter. Interestingly, Israel Englander’s Millennium Management cut the largest investment of the 750 funds tracked by Insider Monkey, totaling an estimated $0.2 million in stock. Donald Sussman’s fund, Paloma Partners, also dumped its stock, about $0.1 million worth. These transactions are intriguing to say the least, as total hedge fund interest dropped by 1 funds in the third quarter.
Let’s check out hedge fund activity in other stocks – not necessarily in the same industry as Flotek Industries Inc (NYSE:FTK) but similarly valued. These stocks are Territorial Bancorp Inc (NASDAQ:TBNK), Net 1 UEPS Technologies Inc (NASDAQ:UEPS), Summit Financial Group, Inc. (NASDAQ:SMMF), Evofem Biosciences, Inc. (NASDAQ:EVFM), Callon Petroleum Company (NYSE:CPE), RGC Resources, Inc. (NASDAQ:RGCO), and MVB Financial Corp. (NASDAQ:MVBF). This group of stocks’ market caps match FTK’s market cap.
|Ticker||No of HFs with positions||Total Value of HF Positions (x1000)||Change in HF Position|
View table here if you experience formatting issues.
As you can see these stocks had an average of 5.6 hedge funds with bullish positions and the average amount invested in these stocks was $13 million. That figure was $27 million in FTK’s case. Net 1 UEPS Technologies Inc (NASDAQ:UEPS) is the most popular stock in this table. On the other hand RGC Resources, Inc. (NASDAQ:RGCO) is the least popular one with only 1 bullish hedge fund positions. Flotek Industries Inc (NYSE:FTK) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for FTK is 75.7. 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 20 most popular stocks among hedge funds returned 41.3% in 2019 and outperformed the S&P 500 ETF (SPY) by 10 percentage points. These stocks gained 32.9% in 2020 through December 8th and beat the market again by 16.2 percentage points. Unfortunately FTK wasn’t nearly as popular as these 20 stocks and hedge funds that were betting on FTK were disappointed as the stock returned -11.4% since the end of September (through 12/8) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 20 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.