The elite funds run by legendary investors such as Dan Loeb and David Tepper make hundreds of millions of dollars for themselves and their investors by spending enormous resources doing research on small cap stocks that big investment banks don’t follow. Because of their pay structures, they have strong incentive to do the research necessary to beat the market. That’s why we pay close attention to what they think in small cap stocks. In this article, we take a closer look at Inphi Corporation (NYSE:IPHI) from the perspective of those elite funds.
Is Inphi Corporation (NYSE:IPHI) the right investment to pursue these days? Prominent investors are turning bullish. The number of bullish hedge fund positions moved up by 5 recently. Inphi Corporation (NYSE:IPHI) was in 19 hedge funds’ portfolio at the end of the third quarter of 2015. There were 14 hedge funds in our database with Inphi Corporation (NYSE:IPHI) holdings at the end of the previous quarter. At the end of this article we will also compare Inphi Corporation (NYSE:IPHI) to other stocks including Remy International Inc (NASDAQ:REMY), Nantkwest Inc (NASDAQ:NK), and PIMCO Corporate&Income Opportunity Fund (NYSE:PTY) to get a better sense of its popularity.
If you’d ask most traders, hedge funds are assumed to be unimportant, outdated financial vehicles of yesteryear. While there are greater than 8000 funds trading at present, Experts at hedge fund tracking site Insider Monkey look at the moguls of this group, approximately 700 funds. These hedge fund managers oversee the lion’s share of the smart money’s total capital, and by paying attention to their best picks, Insider Monkey has brought to light several investment strategies that have historically exceeded the S&P 500 index. Insider Monkey’s small-cap hedge fund strategy outstripped the S&P 500 index by 12 percentage points annually for more than a decade in our back tests.
Keeping this in mind, let’s take a glance at the fresh action surrounding Inphi Corporation (NYSE:IPHI).
What have hedge funds been doing with Inphi Corporation (NYSE:IPHI)?
At the end of the third quarter, a total of 19 of the hedge funds tracked by Insider Monkey were bullish in this stock, an increase of 36% from the previous quarter. With hedge funds’ capital changing hands, there exists a select group of key hedge fund managers who were increasing their holdings considerably.
Leon Shaulov’s Maplelane Capital had the largest position in Inphi Corporation (NYSE:IPHI), worth close to $24.3 million, amounting to 1.5% of its total 13F portfolio. The second largest stake is held by Whale Rock Capital Management, managed by Alex Sacerdote, which held a $14.4 million position; 1.4% of its 13F portfolio is allocated to the company. Remaining members of the smart money with similar optimism include Chuck Royce’s Royce & Associates, Paul Hondros’s AlphaOne Capital Partners and George McCabe’s Portolan Capital Management.
As aggregate interest increased, key money managers have jumped into Inphi Corporation (NYSE:IPHI) headfirst. AlphaOne Capital Partners established the most outsized position in Inphi Corporation (NYSE:IPHI). The fund had $4.4 million invested in the company at the end of the quarter. Richard Driehaus’ Driehaus Capital also made a $2.7 million investment in the stock during the quarter. The other funds with brand new Inphi Corporation (NYSE:IPHI) positions are Scott Fine and Peter Richards’s Empire Capital Management, Leon Shaulov’s Maplelane Capital, and Clifford Fox’s Columbus Circle Investors.
Let’s go over hedge fund activity in other stocks similar to Inphi Corporation (NYSE:IPHI). We will take a look at Remy International Inc (NASDAQ:REMY), Nantkwest Inc (NASDAQ:NK), PIMCO Corporate&Income Opportunity Fund (NYSE:PTY), and Stepan Company (NYSE:SCL). This group of stocks’ market values match Inphi Corporation (NYSE:IPHI)’s market value.
|Ticker||No of HFs with positions||Total Value of HF Positions (x1000)||Change in HF Position|
As you can see these stocks had an average of 11 hedge funds with bullish positions and the average amount invested in these stocks was $87 million. Remy International Inc (NASDAQ:REMY) is the most popular stock in this table. On the other hand Nantkwest Inc (NASDAQ:NK) is the least popular one with only 5 bullish hedge fund positions. Inphi Corporation (NYSE:IPHI) is not the most popular stock in this group but hedge fund interest is still above average. This is a slightly positive signal but we’d rather spend our time researching stocks that hedge funds are piling on. In this regard Remy International Inc (NASDAQ:REMY) might be a better candidate to consider a long position.