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Do Hedge Funds and Insiders Love Taiwan Semiconductor Mfg. Co. Ltd. (ADR) (TSM)?

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Does anybody love Taiwan Semiconductor Mfg. Co. Ltd. (ADR) (NYSE:TSM)?

To many of your peers, hedge funds are seen as overrated, old financial tools of a period lost to current times. Although there are In excess of 8,000 hedge funds trading in present day, this site focuses on the leaders of this group, about 525 funds. It is widely held that this group has its hands on the majority of the smart money’s total assets, and by keeping an eye on their best picks, we’ve unsheathed a number of investment strategies that have historically beaten the market. Our small-cap hedge fund strategy outstripped the S&P 500 index by 18 percentage points per annum for a decade in our back tests, and since we’ve began to sharing our picks with our subscribers at the end of August 2012, we have beaten the S&P 500 index by 33 percentage points in 11 months (explore the details and some picks here).

Just as useful, optimistic insider trading sentiment is another way to look at the financial markets. As the old adage goes: there are a variety of stimuli for a corporate insider to sell shares of his or her company, but only one, very obvious reason why they would behave bullishly. Many academic studies have demonstrated the impressive potential of this tactic if shareholders understand where to look (learn more here).

Taiwan Semiconductor Mfg. Co. Ltd. (ADR)

Now that that’s out of the way, we’re going to examine the recent info surrounding Taiwan Semiconductor Mfg. Co. Ltd. (ADR) (NYSE:TSM).

Hedge fund activity in Taiwan Semiconductor Mfg. Co. Ltd. (ADR) (NYSE:TSM)

At the end of the second quarter, a total of 23 of the hedge funds we track were bullish in this stock, a change of 10% from one quarter earlier. With hedge funds’ positions undergoing their usual ebb and flow, there exists a few key hedge fund managers who were increasing their stakes meaningfully.

According to our 13F database, Renaissance Technologies, managed by Jim Simons, holds the most valuable position in Taiwan Semiconductor Mfg. Co. Ltd. (ADR) (NYSE:TSM). Renaissance Technologies has a $512.1 million position in the stock, comprising 1.3% of its 13F portfolio. Coming in second is Fisher Asset Management, managed by Ken Fisher, which held a $313.7 million position; 0.8% of its 13F portfolio is allocated to the company. Remaining hedgies with similar optimism include Peter Rathjens, Bruce Clarke and John Campbell’s Arrowstreet Capital, Noam Gottesman’s GLG Partners and Cliff Asness’s AQR Capital Management.

With a general bullishness amongst the titans, specific money managers were leading the bulls’ herd. Renaissance Technologies, managed by Jim Simons, established the largest position in Taiwan Semiconductor Mfg. Co. Ltd. (ADR) (NYSE:TSM). Renaissance Technologies had 512.1 million invested in the company at the end of the quarter. Ken Fisher’s Fisher Asset Management also initiated a $313.7 million position during the quarter. The other funds with new positions in the stock are Peter Rathjens, Bruce Clarke and John Campbell’s Arrowstreet Capital, Noam Gottesman’s GLG Partners, and Cliff Asness’s AQR Capital Management.

What have insiders been doing with Taiwan Semiconductor Mfg. Co. Ltd. (ADR) (NYSE:TSM)?

Legal insider trading, particularly when it’s bullish, is at its handiest when the company in question has experienced transactions within the past six months. Over the latest six-month time period, Taiwan Semiconductor Mfg. Co. Ltd. (ADR) (NYSE:TSM) has experienced zero unique insiders purchasing, and zero insider sales (see the details of insider trades here).

We’ll also examine the relationship between both of these indicators in other stocks similar to Taiwan Semiconductor Mfg. Co. Ltd. (ADR) (NYSE:TSM). These stocks are Skyworks Solutions Inc (NASDAQ:SWKS), Marvell Technology Group Ltd. (NASDAQ:MRVL), Xilinx, Inc. (NASDAQ:XLNX), Analog Devices, Inc. (NASDAQ:ADI), and Broadcom Corporation (NASDAQ:BRCM). This group of stocks are in the semiconductor – integrated circuits industry and their market caps are closest to TSM’s market cap.

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