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ARM Holdings plc (ADR) (ARMH), NVIDIA Corporation (NVDA): Hedge Funds Are Selling Microchip Technology Inc. (MCHP)

Microchip Technology Inc. (NASDAQ:MCHP) investors should be aware of a decrease in enthusiasm from smart money of late. What about some of its competitors, like ARM Holdings plc (ADR) (NASDAQ:ARMH) and NVIDIA Corporation (NASDAQ:NVDA)?

Microchip Technology Inc. (NASDAQ:MCHP)At the moment, there are dozens of metrics market participants can use to watch Mr. Market. A pair of the most underrated are hedge fund and insider trading sentiment. At Insider Monkey, our research analyses have shown that, historically, those who follow the best picks of the elite money managers can outpace the S&P 500 by a superb margin (see just how much).

Equally as key, positive insider trading activity is a second way to break down the financial markets. Obviously, there are many motivations for an upper level exec to cut shares of his or her company, but just one, very obvious reason why they would behave bullishly. Plenty of empirical studies have demonstrated the valuable potential of this method if you know where to look (learn more here).

With all of this in mind, it’s important to take a peek at the recent action encompassing Microchip Technology Inc. (NASDAQ:MCHP).

How have hedgies been trading Microchip Technology Inc. (NASDAQ:MCHP)?

In preparation for this year, a total of 17 of the hedge funds we track held long positions in this stock, a change of 0% from the previous quarter. With hedgies’ capital changing hands, there exists an “upper tier” of noteworthy hedge fund managers who were increasing their holdings significantly.

According to our comprehensive database, Citadel Investment Group, managed by Ken Griffin, holds the biggest position in Microchip Technology Inc. (NASDAQ:MCHP). Citadel Investment Group has a $215 million position in the stock, comprising 0.3% of its 13F portfolio. The second largest stake is held by Clint Carlson of Carlson Capital, with a $59 million position; 0.1% of its 13F portfolio is allocated to the stock. Some other hedgies with similar optimism include Peter Rathjens, Bruce Clarke and John Campbell’s Arrowstreet Capital, Phill Gross and Robert Atchinson’s Adage Capital Management and Anand Parekh’s Alyeska Investment Group.

Judging by the fact that Microchip Technology Inc. (NASDAQ:MCHP) has faced declining sentiment from the aggregate hedge fund industry, we can see that there was a specific group of funds that elected to cut their positions entirely in Q4. At the top of the heap, Robert Rodriguez and Steven Romick’s First Pacific Advisors LLC dumped the biggest stake of the 450+ funds we monitor, valued at close to $27 million in stock.. Ray Dalio’s fund, Bridgewater Associates, also cut its stock, about $14 million worth. These bearish behaviors are intriguing to say the least, as aggregate hedge fund interest stayed the same (this is a bearish signal in our experience).

How have insiders been trading Microchip Technology Inc. (NASDAQ:MCHP)?

Insider buying is at its handiest when the company in question has experienced transactions within the past six months. Over the latest half-year time period, Microchip Technology Inc. (NASDAQ:MCHP) has seen zero unique insiders buying, and 11 insider sales (see the details of insider trades here).

Let’s check out hedge fund and insider activity in other stocks similar to Microchip Technology Inc. (NASDAQ:MCHP). Some of these stocks are ARM Holdings plc (ADR) (NASDAQ:ARMH), LSI Corp (NASDAQ:LSI), NVIDIA Corporation (NASDAQ:NVDA) and Altera Corporation (NASDAQ:ALTR).

Company Name # of Hedge Funds # of Insiders Buying # of Insiders Selling
ARM Holdings plc (ADR) (NASDAQ:ARMH) 16 0 0
LSI Corp (NASDAQ:LSI) 26 0 2
Altera Corporation (NASDAQ:ALTR) 21 0 0
Linear Technology Corporation (NASDAQ:LLTC) 21 0 13
NVIDIA Corporation (NASDAQ:NVDA) 27 0 1

With the results exhibited by the aforementioned time-tested strategies, everyday investors must always keep an eye on hedge fund and insider trading activity, and Microchip Technology Inc. (NASDAQ:MCHP) applies perfectly to this mantra.

Click here to learn more about Insider Monkey’s Hedge Fund Newsletter

Insider Monkey’s small-cap strategy returned 37% between September 2012 and March 2013 versus 12.9% for the S&P 500 index. Try it now by clicking the link above.

Related tickers: Microchip Technology Inc. (NASDAQ:MCHP), ARM Holdings plc (ADR) (NASDAQ:ARMH), LSI Corp (NASDAQ:LSI), NVIDIA Corporation (NASDAQ:NVDA), Altera Corporation (NASDAQ:ALTR)

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