Is FLIR Stock A Buy or Sell?

Debasis Saha
·6 min read

Hedge Funds and other institutional investors have just completed filing their 13Fs with the Securities and Exchange Commission, revealing their equity portfolios as of the end of September. At Insider Monkey, we follow nearly 900 active hedge funds and notable investors and by analyzing their 13F filings, we can determine the stocks that they are collectively bullish on. One of their picks is FLIR Systems, Inc. (NASDAQ:FLIR), so let’s take a closer look at the sentiment that surrounds it in the current quarter.

Is FLIR stock a buy? FLIR Systems, Inc. (NASDAQ:FLIR) was in 28 hedge funds' portfolios at the end of the fourth quarter of 2020. The all time high for this statistic is 38. FLIR shareholders have witnessed an increase in enthusiasm from smart money recently. There were 25 hedge funds in our database with FLIR positions at the end of the third quarter. Our calculations also showed that FLIR isn't among the 30 most popular stocks among hedge funds (click for Q4 rankings).

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 197% since March 2017 and outperformed the S&P 500 ETFs by more than 124 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.

John Rogers’ Top 10 Stock Picks
John Rogers’ Top 10 Stock Picks

John Rogers of Ariel Investments

At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, auto parts business is a recession resistant business, so we are taking a closer look at this discount auto parts stock that is growing at a 196% annualized rate. We go through lists like the 15 best micro-cap stocks to buy now to identify the next stock with 10x upside potential. 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 take a peek at the new hedge fund action regarding FLIR Systems, Inc. (NASDAQ:FLIR).

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

Heading into the first quarter of 2021, a total of 28 of the hedge funds tracked by Insider Monkey were long this stock, a change of 12% from the previous quarter. By comparison, 32 hedge funds held shares or bullish call options 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?
Is FLIR A Good Stock To Buy?

Among these funds, Ariel Investments held the most valuable stake in FLIR Systems, Inc. (NASDAQ:FLIR), which was worth $92.1 million at the end of the fourth quarter. On the second spot was Arrowstreet Capital which amassed $66 million worth of shares. ARK Investment Management, Royce & Associates, and Polar Capital 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 Sandbar Asset Management allocated the biggest weight to FLIR Systems, Inc. (NASDAQ:FLIR), around 2.3% of its 13F portfolio. Prospector Partners is also relatively very bullish on the stock, setting aside 2.28 percent of its 13F equity portfolio to FLIR.

With a general bullishness amongst the heavyweights, key money managers have jumped into FLIR Systems, Inc. (NASDAQ:FLIR) headfirst. Sandbar Asset Management, managed by Michael Cowley, established the most valuable position in FLIR Systems, Inc. (NASDAQ:FLIR). Sandbar Asset Management had $14.4 million invested in the company at the end of the quarter. Michael Gelband's ExodusPoint Capital also made a $1.7 million investment in the stock during the quarter. The other funds with brand new FLIR positions are Alec Litowitz and Ross Laser's Magnetar Capital, Noam Gottesman's GLG Partners, and Paul Tudor Jones's Tudor Investment Corp.

Let's go over hedge fund activity in other stocks similar to FLIR Systems, Inc. (NASDAQ:FLIR). We will take a look at BWX Technologies Inc (NYSE:BWXT), JFrog Ltd. (NASDAQ:FROG), Sasol Limited (NYSE:SSL), Ternium S.A. (NYSE:TX), Change Healthcare Inc. (NASDAQ:CHNG), Duck Creek Technologies, Inc. (NASDAQ:DCT), and Huaneng Power International Inc (NYSE:HNP). This group of stocks' market caps are closest to FLIR's market cap.

[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position BWXT,19,144151,-2 FROG,16,324292,-6 SSL,10,43938,5 TX,13,104502,5 CHNG,45,1502723,-4 DCT,22,262672,1 HNP,2,2064,0 Average,18.1,340620,-0.1 [/table]

View table here if you experience formatting issues.

As you can see these stocks had an average of 18.1 hedge funds with bullish positions and the average amount invested in these stocks was $341 million. That figure was $419 million in FLIR's case. Change Healthcare Inc. (NASDAQ:CHNG) is the most popular stock in this table. On the other hand Huaneng Power International Inc (NYSE:HNP) is the least popular one with only 2 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 60.3. 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. 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 12.3% in 2021 through April 19th and still beat the market by 0.9 percentage points. Hedge funds were also right about betting on FLIR as the stock returned 34% since the end of Q4 (through 4/19) 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.

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