Microchip Technology Inc. (MCHP): What Smart Money Thinks about This Stock?

The 700+ hedge funds and money managers tracked by Insider Monkey have already compiled and submitted their 13F filings for the third quarter, which unveil their equity positions as of September 30. We went through these filings, fixed typos and other more significant errors and identified the changes in hedge fund positions. Our extensive review of these public filings is finally over, so this article is set to reveal the smart money sentiment towards Microchip Technology Inc. (NASDAQ:MCHP) .

Microchip Technology Inc. (NASDAQ:MCHP) shares didn’t see a lot of action during the third quarter. Overall, hedge fund sentiment was unchanged and the stock was included in the 13F portfolios of 23 funds from our database at the end of September. At the end of this article we will also compare MCHP to other stocks including Alcoa Inc (NYSE:AA), Henry Schein, Inc. (NASDAQ:HSIC), and American Water Works Co., Inc. (NYSE:AWK) 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.

Now, let’s take a look at the fresh action surrounding Microchip Technology Inc. (NASDAQ:MCHP).

How have hedgies been trading Microchip Technology Inc. (NASDAQ:MCHP)?

A total of 23 funds tracked by Insider Monkey were long Microchip Technology at the end of the third quarter, unchanged over the quarter. On the other hand, there were a total of 13 hedge funds with a bullish position in MCHP at the beginning of this year. With the smart money’s sentiment swirling, there exists a few key hedge fund managers who were increasing their stakes considerably (or already accumulated large positions).

Of the funds tracked by Insider Monkey, Panayotis Takis Sparaggis’ Alkeon Capital Management has the number one position in Microchip Technology Inc. (NASDAQ:MCHP), worth close to $83.4 million, comprising 1.6% of its total 13F portfolio. On Alkeon Capital Management’s heels is Jim Simons’ Renaissance Technologies, with a $41.6 million position; 0.1% of its 13F portfolio is allocated to the company. Remaining peers that hold long positions encompass Dmitry Balyasny’s Balyasny Asset Management, David Harding’s Winton Capital Management, and Peter Rathjens, Bruce Clarke and John Campbell’s Arrowstreet Capital. We should note that none of these hedge funds are among our list of the 100 best performing hedge funds which is based on the performance of their 13F long positions in non-microcap stocks.

On the other hand, there also was a group of money managers that decided to sell off their full holdings last quarter. Interestingly, Joel Greenblatt’s Gotham Asset Management said goodbye to the biggest investment of all the hedgies watched by Insider Monkey, totaling about $13.1 million in stock. Israel Englander’s fund, Millennium Management, also dumped its stock, about $3.7 million worth.

Let’s now review hedge fund activity in other stocks similar to Microchip Technology Inc. (NASDAQ:MCHP). We will take a look at Alcoa Inc (NYSE:AA), Henry Schein, Inc. (NASDAQ:HSIC), American Water Works Co., Inc. (NYSE:AWK), and Citrix Systems, Inc. (NASDAQ:CTXS). All of these stocks’ market caps are closest to MCHP’s market cap.

As you can see these stocks had an average of 30 funds with bullish positions and the average amount invested in these stocks was $1.14 billion. That figure was $295 million in MCHP’s case. Citrix Systems, Inc. (NASDAQ:CTXS) is the most popular stock in this table. On the other hand Henry Schein, Inc. (NASDAQ:HSIC) is the least popular one with only 23 bullish hedge fund positions. Compared to these stocks Microchip Technology Inc. (NASDAQ:MCHP) is even less popular than Henry Schein, Inc. (NASDAQ:HSIC). Considering that hedge funds aren’t fond of this stock in relation to other companies analyzed in this article, it may be a good idea to analyze it in detail and understand why the smart money isn’t behind this stock. This isn’t necessarily bad news. Although it is possible that hedge funds may think the stock is overpriced and view the stock as a short candidate, they may not be very familiar with the bullish thesis. In either case more research is warranted.

Disclosure: none