5 Technology Stocks Hedge Funds Are Dumping

The new Trump administration has not been kind to the high flying technology sector. “FANG” stocks saw selling post the elections, as investors grew concerned that the new trade policies would adversely affect the technology sector which relies largely on earnings from foreign countries. It was feared that other countries might retaliate against tariffs and other restrictive trade measures imposed on the imports of their goods by the United States. In this article we look at some of the technology stocks that were already out of favor amongst hedge funds even before the election results.

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ON Semiconductor Corp. (NASDAQ:ON) is a $5.4 billion semiconductor company that sells images sensors, analog, digital and mixed signal integrated circuits (ICs) to customers. During the third quarter, 13 hedge funds sold their entire position in the stock while Skylands Capital and Richard Pzena’s Pzena Investment Management reduced their holdings in the stock. D.E. Shaw also reduced the holding of this stock by 1.82 million shares during the quarter. The stock have given a return of 22% over the last one year and trades at an earnings multiple of 41x. The analyst community is mostly bullish on this stock with none of the 21 analysts covering the stock rating it as a sell. The company had recently made an offer to buyout Fairchild Semiconductor Intl Inc. (NASDAQ:FCS) for $20 per share in a $2.4 billion deal. The number of funds from our system, having ON Semiconductor Corp. (NASDAQ:ON) in their portfolios also came down to 21 in the third quarter, from 33 in the quarter earlier.

EPAM Systems Inc. (NYSE:EPAM) was another technology stock that saw a fair bit of selling from top hedge funds during the third quarter. Amongst the funds that we track, 9 funds exited their positions in this stock during the third quarter. Dimensional Fund Advisors sold 243,395 shares of the stock, while David Halpert’s Prince Street Capital Management sold out its whole position by selling 178,400 shares. Some of the other large hedge fund sellers were Adage Capital Fund Partners, Clinton Group and Oak Ridge Investments. The stock performance has been quite woeful, with the stock declining by 10% over the last 6 months. This software services company had reported $914 million in revenues in 2015 with a net income of $26 million. Analysts expect the company to grow its earnings by approximately 10% in the current year.

LinkedIn Corp. (NYSE:LNKD) has seen its stock price rocket up by more than 50% over the last 6 months and currently trades near the $200 mark. The stock price has gone up post the offer to be bought by Microsoft Inc. (NASDAQ:MSFT). In June, Microsoft Inc. (NASDAQ:MSFT) agreed to buy the company for $26.2 billion. With the stock price not expected to appreciate much, hedge funds have been dumping this stock. Advent Capital Management and Pictet Asset Management were the largest hedge fund sellers of the stock. Palisade Capital Management, Man Investments and Nicholas Investment Partners were some of the other large hedge funds which sold off their entire stock of LinkedIn Corp. (NYSE:LNKD). All the 17 analysts covering this stock have rated it as a hold. As per our records, 59 hedge funds held shares worth $4.8 billion during the third quarter.

Citrix Systems, Inc. (NASDAQ:CTXS) one of the largest cloud companies with a market value of $13.76 billion, saw the number of hedge funds long in it decline by 7 to 38 by Septem ber end. The third quarter saw significant selling of this stock by prominent hedge funds. Lombard Odier Asset Management was the biggest seller of this stock, reducing its stake from 9.2% to just 1.7% by selling a whopping 153 million shares. Other major sellers were Oaktree Capital Management, Pictet Asset Management and GLG Partners. The stock has climbed up by 22% in the last one year and sports a P/E multiple of nearly 30x. The stock has been given an average target price of $92 by analysts, which implies a measly 5% upside form the current stock price. Citrix Systems, Inc. (NASDAQ:CTXS) was downgraded to sell from neutral at UBS and Jeffries.

D.E Shaw and Scopia Capital Management sold 1.6 million and 6.85 million shares of Sabre Corp. (NASDAQ:SABR) respectively, during the third quarter. Other large sellers of this stock included Carlson Capital, James Dondero’s Highland Capital Management, Two Sigma Advisers and Janus Capital. The company which is large software solution provider to the travel and tourism industry has seen its price decline by 10% over the last one year. It is currently trading in the middle of its yearly price range and gives a dividend yield of 2%. The company announced that its Chief Executive Tom Klein would resign at the end of the year after completing three years at the helm of the company. 7% of the company’s floating stock is currently sold short on the exchange. It reported $3.3 billion of revenues over the last 12 months with an operating cash flow of $557 million. The number of funds from our records holding sabre Corp (NASDAQ:SABR) declined to 29 from 36, quarter over quarter. The value of their holdings also came down to $1.94 billion from $2.07 billion in the earlier quarter.

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