Is Lam Research Corporation (LRCX) A Good Stock To Buy?

We at Insider Monkey have gone over 742 13F filings that hedge funds and prominent investors are required to file by the government. The 13F filings show the funds’ and investors’ portfolio positions as of September 30. In this article, we look at what those funds think of Lam Research Corporation (NASDAQ:LRCX) based on that data.

Hedge fund interest towards Lam Research Corporation (NASDAQ:LRCX) shares remained unchanged during the third quarter. This is usually a negative indicator. However, before jumping to any conclusions, at the end of this article we will also compare LRCX to other stocks including EQT Corporation (NYSE:EQT), Laboratory Corp. of America Holdings (NYSE:LH), and Markel Corporation (NYSE:MKL) to get a better sense of its popularity.

At Insider Monkey, we’ve developed an investment strategy that has delivered market-beating returns over the past 12 months. Our strategy identifies the 100 best-performing funds of the previous quarter from among the collection of 700+ successful funds that we track in our database, which we accomplish using our returns methodology. We then study the portfolios of those 100 funds using the latest 13F data to uncover the 30 most popular mid-cap stocks (market caps of between $1 billion and $10 billion) among them to hold until the next filing period. This strategy delivered 18% gains over the past 12 months, more than doubling the 8% returns enjoyed by the S&P 500 ETFs.

Keeping this in mind, let’s review the key action surrounding Lam Research Corporation (NASDAQ:LRCX).

Hedge fund activity in Lam Research Corporation (NASDAQ:LRCX)

Overall, 47 funds tracked by Insider Monkey held long positions in Lam Research Corporation at the end of September, unchanged over the quarter. Interestingly, as you can see from the graph below, hedge fund interest in LRCX has been extremely stable over the last 5 quarters. With the smart money’s positions undergoing their usual ebb and flow, there exists a few key hedge fund managers who were boosting their stakes substantially (or already accumulated large positions).

When looking at the institutional investors followed by Insider Monkey, Lee Ainslie’s Maverick Capital has the biggest position in Lam Research Corporation (NASDAQ:LRCX), worth close to $430.5 million, comprising 5.1% of its total 13F portfolio. The second most bullish fund manager is Two Sigma Advisors, managed by John Overdeck and David Siegel, which holds a $188.9 million position. Remaining hedge funds and institutional investors that hold long positions contain Principal Global Investors’ Columbus Circle Investors, Cliff Asness’ AQR Capital Management, and Ken Griffin’s Citadel Investment Group.

Seeing as Lam Research Corporation (NASDAQ:LRCX) has faced a decline in interest from the smart money, logic holds that there is a sect of hedge funds that slashed their entire stakes last quarter. Interestingly, Charles Clough’s Clough Capital Partners sold off the biggest stake of the “upper crust” of funds watched by Insider Monkey, worth about $54 million in stock. Leon Shaulov’s fund, Maplelane Capital, also sold off its position, worth about $25.2 million. These bearish behaviors are intriguing to say the least, as total hedge fund interest stayed the same (this is a bearish signal in our experience).

Let’s also examine hedge fund activity in other stocks – not necessarily in the same industry as Lam Research Corporation (NASDAQ:LRCX) but similarly valued. We will take a look at EQT Corporation (NYSE:EQT), Laboratory Corp. of America Holdings (NYSE:LH), Markel Corporation (NYSE:MKL), and SK Telecom Co., Ltd. (ADR) (NYSE:SKM). This group of stocks’ market caps are similar to LRCX’s market cap.

As you can see these stocks had an average of 24 funds with bullish positions and the average amount invested in these stocks was $860 million. That figure was $2.03 million in LRCX’s case. Laboratory Corp. of America Holdings (NYSE:LH) is the most popular stock in this table. On the other hand SK Telecom Co., Ltd. (ADR) (NYSE:SKM) is the least popular one with only 12 bullish hedge fund positions. Compared to these stocks Lam Research Corporation (NASDAQ:LRCX) 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.

Disclosure: None