Dear Valued Visitor,

We have noticed that you are using an ad blocker software.

Although advertisements on the web pages may degrade your experience, our business certainly depends on them and we can only keep providing you high-quality research based articles as long as we can display ads on our pages.

To view this article, you can disable your ad blocker and refresh this page or simply login.

We only allow registered users to use ad blockers. You can sign up for free by clicking here or you can login if you are already a member.

Two Semiconductors Stocks Beat the Market Today; Should You Follow Hedge Funds Into Them?

Page 1 of 2

The S&P 500 is down 1.5% and the NASDAQ lost 1.8% in morning trade as macro uncertainty weighs. Among the few stocks in the green are semiconductor companies Intel Corporation (NASDAQ:INTC) and Atmel Corporation (NASDAQ:ATML), which are up by 0.5% and 3.18% respectively. Let’s find out why investors are buying their shares and see if the smart money agrees with today’s sentiment.

motherboard, circuit, chip, Intel, Micron, Qualcomm, AMD

Most investors don’t understand hedge funds and indicators that are based on hedge funds’ activities. They ignore hedge funds because of their recent poor performance in the bull market. Our research indicates that hedge funds underperformed because they aren’t 100% long. Hedge fund fees are also very large compared to the returns generated and they reduce the net returns experienced by investors. We uncovered that hedge funds’ long positions actually outperformed the market. For instance the 15 most popular small-cap stocks among funds beat the S&P 500 Index by around 60 percentage points since the end of August 2012. These stocks returned a cumulative of 118% vs. a 58% gain for the S&P 500 Index (read more details). That’s why we believe investors should pay attention to what hedge funds are buying (rather than what their net returns are).

Follow Intel Corp (NASDAQ:INTC)
Trade (NASDAQ:INTC) Now!

Intel Corporation (NASDAQ:INTC) shares are rallying because of the follow-on momentum generated from analyst upgrades. Bernstein upgraded Intel on September 23 to ‘Market Perform’ from ‘Underperform’, noting Intel’s client business channel inventory appears to be falling faster than expected. JMP Securities upgraded Intel a few days later to ‘Market Perform’ from ‘Underperform’, citing the same trend. Overall, five analysts have a ‘Sell’ rating, 18 have a ‘Hold’ rating, and 24 have a ‘Buy’ rating on Intel, with a consensus price target of $34.62 per share.

With the recent launch of Windows 10, PC sales could be stronger than anticipated as pent-up demand drives transactions. Intel shares are themselves cheap, with a forward PE of 12.4 and a dividend yield of 3.3%. Given the flurry of upgrades, the Windows 10 launch, and Intel’s cheap valuation, investors could also be buying in anticipation of further analyst upgrades and a good quarterly earnings report on October 13.

While analysts are more bullish on Intel, the smart money is more cautious. According to our database of around 730 funds, the total number of hedge fund investors long Intel Corporation (NASDAQ:INTC) declined to 48 at the end of June from 61 at the end of March and the total value of hedge funds’ holdings decreased to $4.2 billion (2.9% of the float) from $5.2 billion on March 31. Among the hedge funds that cut their positions in the second quarter were First Eagle Investment Management, which trimmed its holding by 2% to 28.48 million shares, and Richard Pzena’s Pzena Investment Management, which pared its stake by 4% to 11.24 million shares. Ross Margolies’ Stelliam Investment Management cut its holdings by 27% to 5.34 million shares too. Going the opposite way was Peter Rathjens, Bruce Clarke And John Campbell’s Arrowstreet Capital, which increased its holding by 6% to 12.84 million shares, and Cliff Asness’ AQR Capital Management, which upped its stake by 20% to 11.88 million shares. 

Page 1 of 2

Biotech Stock Alert - 20% Guaranteed Return in One Year

Hedge Funds and Insiders Are Piling Into

One of 2015's best hedge funds and two insiders snapped up shares of this medical device stock recently. We believe its transformative and disruptive device will storm the $3+ billion market and help it achieve 500%-1000% gains in 3 years.

Get your FREE REPORT and the details of our 20% return guarantee today.

Subscribe me to Insider Monkey's Free Daily Newsletter
This is a FREE report from Insider Monkey. Credit Card is NOT required.
Loading Comments...

Thanks! An email with instructions is sent to !

Your email already exists in our database. Click here to go to your subscriptions

Insider Monkey returned 102% in 3 years!! Wondering How?

Download a complete edition of our newsletter for free!