Voya MI Dynamic Small Cap Fund on Flowserve Corporation
Thesis
Flowserve is a non-benchmark holding supplying industrial pumps and valves. Voya's machine-learning models favored its valuation on EBITDA measures and its short-interest characteristics. The position detracted during the quarter as organic sales declined, the growth outlook was reduced, and activist pressure raised questions about management execution.
“Shares weakened after declining organic sales, reduced growth outlook, and activist investor pressure questioning management execution.”
Key risks
- Declining organic sales.
- Reduced growth outlook.
- Activist pressure questioning management execution.