Here is What Hedge Funds Think About Avago Technologies Ltd (AVGO)

Is Avago Technologies Ltd (NASDAQ:AVGO) a good investment right now? We check hedge fund and billionaire investor sentiment before delving into hours of research. Hedge funds spend millions of dollars on Ivy League graduates, expert networks, and get tips from industry insiders. They fail miserably sometimes but historically their consensus stock picks outperformed the market after adjusting for known risk factors.

Is Avago Technologies Ltd (NASDAQ:AVGO) a bargain? The smart money is selling. The number of long hedge fund bets fell by 6 lately. AVGO was in 66 hedge funds’ portfolios at the end of September. There were 72 hedge funds in our database with AVGO holdings at the end of the previous quarter. The level and the change in hedge fund popularity aren’t the only variables you need to analyze to decipher hedge funds’ perspectives. A stock may witness a boost in popularity but it may still be less popular than similarly priced stocks. That’s why at the end of this article we will examine companies such as Prudential Financial Inc (NYSE:PRU), General Mills, Inc. (NYSE:GIS), and ACE Limited (NYSE:ACE) to gather more data points.

Keeping this in mind, we’re going to view the new action surrounding Avago Technologies Ltd (NASDAQ:AVGO).

How have hedgies been trading Avago Technologies Ltd (NASDAQ:AVGO)?

At the end of the third quarter, a total of 66 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -8% from the previous quarter. With the smart money’s capital changing hands, there exists an “upper tier” of notable hedge fund managers who were increasing their holdings substantially (or already accumulated large positions).

According to Insider Monkey’s hedge fund database, Viking Global, managed by Andreas Halvorsen, holds the number one position in Avago Technologies Ltd (NASDAQ:AVGO). Viking Global has a $867.5 million position in the stock, comprising 3.3% of its 13F portfolio. The second largest stake is held by Coatue Management, led by Philippe Laffont, holding a $542.3 million position; the fund has 6.1% of its 13F portfolio invested in the stock. Other members of the smart money with similar optimism comprise Daniel S. Och’s OZ Management, Dan Loeb’s Third Point and Ken Griffin’s Citadel Investment Group.

Judging by the fact that Avago Technologies Ltd (NASDAQ:AVGO) has faced declining sentiment from the smart money, it’s easy to see that there were a few funds who sold off their positions entirely in the third quarter. Interestingly, Doug Silverman and Alexander Klabin’s Senator Investment Group dropped the biggest stake of the 700 funds tracked by Insider Monkey, valued at close to $166.2 million in stock. James Dinan’s fund, York Capital Management, also sold off its stock, about $159 million worth. These bearish behaviors are interesting, as total hedge fund interest was cut by 6 funds in the third quarter.

Let’s now review hedge fund activity in other stocks – not necessarily in the same industry as Avago Technologies Ltd (NASDAQ:AVGO) but similarly valued. These stocks are Prudential Financial Inc (NYSE:PRU), General Mills, Inc. (NYSE:GIS), ACE Limited (NYSE:ACE), and Luxottica Group SpA (ADR) (NYSE:LUX). This group of stocks’ market valuations match AVGO’s market valuation.

As you can see these stocks had an average of 27.25 hedge funds with bullish positions and the average amount invested in these stocks was $701 million. That figure was $4396 million in AVGO’s case. Prudential Financial Inc (NYSE:PRU) is the most popular stock in this table. On the other hand Luxottica Group SpA (ADR) (NYSE:LUX) is the least popular one with only 5 bullish hedge fund positions. Compared to these stocks Avago Technologies Ltd (NASDAQ:AVGO) is more popular among hedge funds. Considering that hedge funds are fond of this stock in relation to its market cap peers, it may be a good idea to analyze it in detail and potentially include it in your portfolio.