Omega Flex, Inc. (OFLX) Fell Out Of Favor With Hedge Funds

After several tireless days we have finished crunching the numbers from nearly 900 13F filings issued by the elite hedge funds and other investment firms that we track at Insider Monkey, which disclosed those firms’ equity portfolios as of March 31st. The results of that effort will be put on display in this article, as we share valuable insight into the smart money sentiment towards Omega Flex, Inc. (NASDAQ:OFLX).

Omega Flex, Inc. (NASDAQ:OFLX) was in 5 hedge funds’ portfolios at the end of the first quarter of 2021. The all time high for this statistic is 6. OFLX shareholders have witnessed a decrease in activity from the world’s largest hedge funds of late. There were 6 hedge funds in our database with OFLX holdings at the end of December. Our calculations also showed that OFLX isn’t among the 30 most popular stocks among hedge funds (click for Q1 rankings).

So, why do we pay attention to hedge fund sentiment before making any investment decisions? Our research has shown that hedge funds’ small-cap stock picks managed to beat the market by double digits annually between 1999 and 2016, but the margin of outperformance has been declining in recent years. Nevertheless, we were still able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by more than 115 percentage points since March 2017 (see the details here). We have been able to outperform the passive index funds by tracking the moves of corporate insiders and hedge funds, and we believe small investors can benefit a lot from reading hedge fund investor letters and 13F filings.

At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, an activist hedge fund owns nearly 40% of this $23 biotech stock and is trying to buy the rest for around $50. So, we recommended a long position to our monthly premium newsletter subscribers. We go through lists like the 10 best battery 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. 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. Keeping this in mind let’s review the fresh hedge fund action encompassing Omega Flex, Inc. (NASDAQ:OFLX).

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

At the end of March, a total of 5 of the hedge funds tracked by Insider Monkey were long this stock, a change of -17% from the fourth quarter of 2020. Below, you can check out the change in hedge fund sentiment towards OFLX over the last 23 quarters. So, let’s review which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

According to Insider Monkey’s hedge fund database, Renaissance Technologies has the biggest position in Omega Flex, Inc. (NASDAQ:OFLX), worth close to $4.4 million, amounting to less than 0.1%% of its total 13F portfolio. The second largest stake is held by AQR Capital Management, managed by Cliff Asness, which holds a $0.6 million position; the fund has less than 0.1%% of its 13F portfolio invested in the stock. Remaining hedge funds and institutional investors with similar optimism consist of Ken Griffin’s Citadel Investment Group, D. E. Shaw’s D E Shaw and Paul Tudor Jones’s Tudor Investment Corp. In terms of the portfolio weights assigned to each position Tudor Investment Corp allocated the biggest weight to Omega Flex, Inc. (NASDAQ:OFLX), around 0.01% of its 13F portfolio. Renaissance Technologies is also relatively very bullish on the stock, designating 0.01 percent of its 13F equity portfolio to OFLX.

Judging by the fact that Omega Flex, Inc. (NASDAQ:OFLX) has witnessed falling interest from hedge fund managers, logic holds that there is a sect of money managers that decided to sell off their entire stakes heading into Q2. Intriguingly, Israel Englander’s Millennium Management said goodbye to the biggest stake of the “upper crust” of funds watched by Insider Monkey, valued at about $0.4 million in stock, and Roger Ibbotson’s Zebra Capital Management was right behind this move, as the fund cut about $0.3 million worth. These bearish behaviors are interesting, as total hedge fund interest dropped by 1 funds heading into Q2.

Let’s check out hedge fund activity in other stocks – not necessarily in the same industry as Omega Flex, Inc. (NASDAQ:OFLX) but similarly valued. These stocks are Century Aluminum Co (NASDAQ:CENX), Rattler Midstream LP (NASDAQ:RTLR), The E.W. Scripps Company (NASDAQ:SSP), Tattooed Chef, Inc. (NASDAQ:TTCF), Vuzix Corporation (NASDAQ:VUZI), Immunovant, Inc. (NASDAQ:IMVT), and Enerpac Tool Group Corp. (NYSE:EPAC). This group of stocks’ market values are similar to OFLX’s market value.

View table here if you experience formatting issues.

As you can see these stocks had an average of 14.3 hedge funds with bullish positions and the average amount invested in these stocks was $99 million. That figure was $6 million in OFLX’s case. Immunovant, Inc. (NASDAQ:IMVT) is the most popular stock in this table. On the other hand Rattler Midstream LP (NASDAQ:RTLR) is the least popular one with only 6 bullish hedge fund positions. Compared to these stocks Omega Flex, Inc. (NASDAQ:OFLX) is even less popular than RTLR. Our overall hedge fund sentiment score for OFLX is 29. 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. Hedge funds dodged a bullet by taking a bearish stance towards OFLX. Our calculations showed that the top 10 most popular hedge fund stocks returned 95.8% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 40 percentage points. These stocks gained 17.4% in 2021 through June 18th but managed to beat the market again by 6.1 percentage points. Unfortunately OFLX wasn’t nearly as popular as these 5 stocks (hedge fund sentiment was very bearish); OFLX investors were disappointed as the stock returned -8.5% since the end of the first quarter (through 6/18) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 5 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.