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2019 Review: Most Favored Hedge Fund Stocks vs. Maxim Integrated Products Inc. (MXIM)

We are still in an overall bull market and many stocks that smart money investors were piling into surged in 2019. Among them, Facebook and Microsoft ranked among the top 3 picks and these stocks gained 57% each. Hedge funds’ top 3 stock picks returned 45.7% last year and beat the S&P 500 ETFs by more than 14 percentage points. Investing in index funds guarantees you average returns, not superior returns. We are looking to generate superior returns for our readers. 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 Maxim Integrated Products Inc. (NASDAQ:MXIM).

Maxim Integrated Products Inc. (NASDAQ:MXIM) was in 29 hedge funds’ portfolios at the end of September. MXIM has seen an increase in support from the world’s most elite money managers lately. There were 28 hedge funds in our database with MXIM positions at the end of the previous quarter. Our calculations also showed that MXIM isn’t among the 30 most popular stocks among hedge funds (click for Q3 rankings and see the video at the end of this article for Q2 rankings).

Today there are a large number of methods market participants put to use to appraise publicly traded companies. A pair of the most underrated methods are hedge fund and insider trading moves. Our researchers have shown that, historically, those who follow the best picks of the best investment managers can beat the S&P 500 by a solid amount (see the details here).

Noam Gottesman GLG Partners

Noam Gottesman of GLG Partners

We leave no stone unturned when looking for the next great investment idea. For example Europe is set to become the world’s largest cannabis market, so we check out this European marijuana stock pitch. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. This December, we recommended Adams Energy as a one-way bet based on an under-the-radar fund manager’s investor letter and the stock is still extremely cheap despite already gaining 20 percent. Keeping this in mind let’s view the recent hedge fund action encompassing Maxim Integrated Products Inc. (NASDAQ:MXIM).

What does smart money think about Maxim Integrated Products Inc. (NASDAQ:MXIM)?

Heading into the fourth quarter of 2019, a total of 29 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 4% from one quarter earlier. By comparison, 30 hedge funds held shares or bullish call options in MXIM a year ago. With the smart money’s capital changing hands, there exists a few notable hedge fund managers who were upping their holdings substantially (or already accumulated large positions).

More specifically, GLG Partners was the largest shareholder of Maxim Integrated Products Inc. (NASDAQ:MXIM), with a stake worth $59.5 million reported as of the end of September. Trailing GLG Partners was Two Sigma Advisors, which amassed a stake valued at $53 million. Renaissance Technologies, AQR Capital Management, and Arrowstreet Capital were also very fond of the stock, becoming one of the largest hedge fund holders of the company. In terms of the portfolio weights assigned to each position Mondrian Capital allocated the biggest weight to Maxim Integrated Products Inc. (NASDAQ:MXIM), around 2.24% of its 13F portfolio. Prospector Partners is also relatively very bullish on the stock, earmarking 0.45 percent of its 13F equity portfolio to MXIM.

As aggregate interest increased, some big names were leading the bulls’ herd. Arrowstreet Capital, managed by Peter Rathjens, Bruce Clarke and John Campbell, initiated the largest position in Maxim Integrated Products Inc. (NASDAQ:MXIM). Arrowstreet Capital had $20.4 million invested in the company at the end of the quarter. Paul Marshall and Ian Wace’s Marshall Wace also made a $6.8 million investment in the stock during the quarter. The other funds with brand new MXIM positions are Dmitry Balyasny’s Balyasny Asset Management, Benjamin A. Smith’s Laurion Capital Management, and Lee Ainslie’s Maverick Capital.

Let’s check out hedge fund activity in other stocks – not necessarily in the same industry as Maxim Integrated Products Inc. (NASDAQ:MXIM) but similarly valued. We will take a look at Evergy, Inc. (NYSE:EVRG), Loews Corporation (NYSE:L), Deutsche Bank Aktiengesellschaft (NYSE:DB), and Nucor Corporation (NYSE:NUE). This group of stocks’ market values are closest to MXIM’s market value.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
EVRG 25 866687 0
L 25 224303 4
DB 12 983289 1
NUE 26 167282 4
Average 22 560390 2.25

View table here if you experience formatting issues.

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 $560 million. That figure was $249 million in MXIM’s case. Nucor Corporation (NYSE:NUE) is the most popular stock in this table. On the other hand Deutsche Bank Aktiengesellschaft (NYSE:DB) is the least popular one with only 12 bullish hedge fund positions. Compared to these stocks Maxim Integrated Products Inc. (NASDAQ:MXIM) is more popular among hedge funds. Our calculations showed that top 20 most popular stocks among hedge funds returned 41.3% in 2019 and outperformed the S&P 500 ETF (SPY) by 10.1 percentage points. Unfortunately MXIM wasn’t nearly as popular as these 20 stocks and hedge funds that were betting on MXIM were disappointed as the stock returned 25.2% in 2019 and trailed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 20 most popular stocks among hedge funds as 65 percent of these stocks outperformed the market in 2019.
5 Most Popular Stocks Among Hedge Funds
Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.

Disclosure: None. This article was originally published at Insider Monkey.

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