It seems that the masses and most of the financial media hate hedge funds and what they do, but why is this hatred of hedge funds so prominent? At the end of the day, these asset management firms do not gamble the hard-earned money of the people who are on the edge of poverty. Truth be told, most hedge fund managers and other smaller players within this industry are very smart and skilled investors. Of course, they may also make wrong bets in some instances, but no one knows what the future holds and how market participants will react to the bountiful news that floods in each day. The S&P 500 Index gained 5.2% in the 12 month-period that ended October 30, while less than 49% of its stocks beat the benchmark. In contrast, the 30 most popular S&P 500 stocks among the hedge fund investors tracked by the Insider Monkey team returned 9.5% over the same period, which provides evidence that these money managers do have great stock picking abilities. Even more to that, 63% of these stocks managed to beat the S&P 500 Index. That’s why we believe it isn’t a waste of time to check out hedge fund sentiment before you invest in a stock like Microsemi Corporation (NASDAQ:MSCC).
Is Microsemi Corporation ready to rally soon? The smart money is in a bearish mood. The number of long hedge fund positions dropped by 9 in recent months. MSCC was in 12 hedge funds’ portfolios at the end of September. There were 21 hedge funds in our database with MSCC positions 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 Whiting Petroleum Corp (NYSE:WLL), Nabors Industries Ltd. (NYSE:NBR), and Tallgrass Energy GP LP (NYSE:TEGP) to gather more data points.
Follow Microsemi Corp (NASDAQ:MSCC)
Follow Microsemi Corp (NASDAQ:MSCC)
To the average investor, there are tons of signals stock traders use to evaluate stocks. A pair of the most underrated signals are hedge fund and insider trading indicators. Our experts have shown that, historically, those who follow the top picks of the top money managers can outpace the market by a significant amount (see the details here).
With all of this in mind, let’s take a look at the key action surrounding Microsemi Corporation (NASDAQ:MSCC).
How have hedgies been trading Microsemi Corporation (NASDAQ:MSCC)?
At the Q3’s end, a total of 12 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -43% from the previous quarter. With hedgies’ positions undergoing their usual ebb and flow, there exists a select group of key hedge fund managers who were boosting their holdings substantially (or already accumulated large positions).
According to publicly available hedge fund and institutional investor holdings data compiled by Insider Monkey, Chuck Royce’s Royce & Associates has the biggest position in Microsemi Corporation (NASDAQ:MSCC), worth close to $22.8 million, comprising 0.1% of its total 13F portfolio. Sitting at the No. 2 spot is Adage Capital Management, managed by Phill Gross and Robert Atchinson, which holds a $20.1 million position; 0.1% of its 13F portfolio is allocated to the stock. Other peers with similar optimism comprise D. E. Shaw’s D E Shaw, Steven Tananbaum’s GoldenTree Asset Management and David Dreman’s Dreman Value Management.
Because Microsemi Corporation (NASDAQ:MSCC) has experienced a declination in interest from the entirety of the hedge funds we track, logic holds that there is a sect of funds who were dropping their full holdings heading into Q4. Intriguingly, Alex Sacerdote’s Whale Rock Capital Management said goodbye to the biggest stake of the “upper crust” of funds watched by Insider Monkey, valued at an estimated $17.1 million in stock. George Soros’ fund, Soros Fund Management, also cut its stock, about $9.8 million worth. These bearish behaviors are important to note, as aggregate hedge fund interest was cut by 9 funds heading into Q4.
Let’s also examine hedge fund activity in other stocks – not necessarily in the same industry as Microsemi Corporation (NASDAQ:MSCC) but similarly valued. We will take a look at Whiting Petroleum Corp (NYSE:WLL), Nabors Industries Ltd. (NYSE:NBR), Tallgrass Energy GP LP (NYSE:TEGP), and Healthcare Trust Of America Inc (NYSE:HTA). This group of stocks’ market values resemble MSCC’s market value.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| WLL | 42 | 767203 | -11 |
| NBR | 22 | 229973 | -4 |
| TEGP | 10 | 56213 | 1 |
| HTA | 12 | 108856 | 3 |
As you can see these stocks had an average of 22 hedge funds with bullish positions and the average amount invested in these stocks was $291 million. That figure was $82 million in MSCC’s case. Whiting Petroleum Corp (NYSE:WLL) is the most popular stock in this table. On the other hand Tallgrass Energy GP LP (NYSE:TEGP) is the least popular one with only 10 bullish hedge fund positions. Microsemi Corporation (NASDAQ:MSCC) is not the least popular stock in this group, but hedge fund interest is still below average. This is a slightly negative signal and we’d rather spend our time researching stocks that hedge funds are piling on. In this regard WLL might be a better candidate to consider a long position.
