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Maxim Integrated Products Inc. (NASDAQ:MXIM): Hedge Funds and Insiders Are Bearish, What Should You Do? – AU Optronics Corp. (ADR) (NYSE:AUO), NXP Semiconductors NV (NASDAQ:NXPI)

Is Maxim Integrated Products Inc. (NASDAQ:MXIM) undervalued? Money managers are in a bearish mood. The number of long hedge fund positions decreased by 8 in recent months.

Maxim Integrated Products Inc. (NASDAQ:MXIM)

In the 21st century investor’s toolkit, there are plenty of gauges investors can use to track Mr. Market. Some of the most useful are hedge fund and insider trading interest. At Insider Monkey, our research analyses have shown that, historically, those who follow the top picks of the elite hedge fund managers can outperform the market by a significant margin (see just how much).

Equally as important, positive insider trading sentiment is another way to break down the financial markets. Just as you’d expect, there are many stimuli for an insider to downsize shares of his or her company, but only one, very simple reason why they would buy. Several academic studies have demonstrated the market-beating potential of this tactic if you understand what to do (learn more here).

Consequently, let’s take a glance at the key action regarding Maxim Integrated Products Inc. (NASDAQ:MXIM).

How are hedge funds trading Maxim Integrated Products Inc. (NASDAQ:MXIM)?

In preparation for this year, a total of 14 of the hedge funds we track held long positions in this stock, a change of -36% from the third quarter. With hedge funds’ capital changing hands, there exists a few noteworthy hedge fund managers who were upping their holdings significantly.

Of the funds we track, Renaissance Technologies, managed by Jim Simons, holds the most valuable position in Maxim Integrated Products Inc. (NASDAQ:MXIM). Renaissance Technologies has a $78 million position in the stock, comprising 0.2% of its 13F portfolio. Sitting at the No. 2 spot is Arrowstreet Capital, managed by Peter Rathjens, Bruce Clarke and John Campbell, which held a $76 million position; the fund has 0.4% of its 13F portfolio invested in the stock. Other hedge funds with similar optimism include Ken Griffin’s Citadel Investment Group, Steven Cohen’s SAC Capital Advisors and Peter Rathjens, Bruce Clarke and John Campbell’s Arrowstreet Capital.

Seeing as Maxim Integrated Products Inc. (NASDAQ:MXIM) has experienced declining sentiment from the smart money, we can see that there were a few hedgies that slashed their positions entirely in Q4. Interestingly, Robert Rodriguez and Steven Romick’s First Pacific Advisors LLC cut the biggest investment of the “upper crust” of funds we track, totaling close to $18 million in stock., and Phill Gross and Robert Atchinson of Adage Capital Management was right behind this move, as the fund dropped about $14 million worth. These bearish behaviors are intriguing to say the least, as aggregate hedge fund interest dropped by 8 funds in Q4.

How have insiders been trading Maxim Integrated Products Inc. (NASDAQ:MXIM)?

Insider buying is best served when the company we’re looking at has seen transactions within the past half-year. Over the latest six-month time frame, Maxim Integrated Products Inc. (NASDAQ:MXIM) has seen zero unique insiders buying, and 13 insider sales (see the details of insider trades here).

Let’s go over hedge fund and insider activity in other stocks similar to Maxim Integrated Products Inc. (NASDAQ:MXIM). These stocks are Freescale Semiconductor Ltd (NYSE:FSL), AU Optronics Corp. (ADR) (NYSE:AUO), STMicroelectronics N.V. (ADR) (NYSE:STM), NXP Semiconductors NV (NASDAQ:NXPI), and Avago Technologies Ltd (NASDAQ:AVGO). All of these stocks are in the semiconductor – broad line industry and their market caps are similar to MXIM’s market cap.

Company Name # of Hedge Funds # of Insiders Buying # of Insiders Selling
Freescale Semiconductor Ltd (NYSE:FSL) 7 0 6
AU Optronics Corp. (ADR) (NYSE:AUO) 6 0 0
STMicroelectronics N.V. (ADR) (NYSE:STM) 9 0 0
NXP Semiconductors NV (NASDAQ:NXPI) 20 0 0
Avago Technologies Ltd (NASDAQ:AVGO) 33 0 8

With the results shown by the aforementioned strategies, retail investors should always watch hedge fund and insider trading sentiment, and Maxim Integrated Products Inc. (NASDAQ:MXIM) applies perfectly to this mantra.

Click here to learn more about Insider Monkey’s Hedge Fund Newsletter

Insider Monkey’s small-cap strategy returned 37% between September 2012 and March 2013 versus 12.9% for the S&P 500 index. Try it now by clicking the link above.

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