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Analog Devices, Inc. (ADI) Soars On Financial Results; Do Hedge Fund Like The Stock?

After reporting financial results that trumped the estimates, Analog Devices, Inc. (NASDAQ:ADI)‘s stock has soared in pre-market trading on Wednesday. The company delivered a net income of $216.48 million, or $0.77 per share, and revenue of $863.37 million for the third quarter of fiscal 2015, which is better than EPS of $0.63 and revenue of $727.75 million reported a year earlier. The 19% year-over-year rise in revenues was headlined by the Industrial and Consumer segments of the firm which witnessed growth in revenues on the year of 44% and 24%, respectively. At the same time, analysts expected revenue of $845.43 million and earnings of $0.74 per share.

Furthermore, the company expects EPS in the range of $0.79 to $0.87 on revenues between $880 million to $940 million for the fourth quarter. The good new news coming from Analog Devices, Inc. (NASDAQ:ADI) is in contrast to what its semiconductor industry peer Micron Technology, Inc. (NASDAQ:MU) has reported in its latest quarterly results, which missed the estimates. In addition, Analog Devices also experienced a dissimilar fate against peers like Micron Technology in terms of hedge fund interest in the first and second quarters, which we will discuss later.

Silicon Wafer Sunedison SUNE Semiconductor Stocks Technology 2

In the meantime, we will tackle first why Insider Monkey is interested in hedge fund confidence in companies like Analog Devices and Micron Technology. Professional investors spend considerable time and money conducting due diligence on each company they invest in, which makes them the perfect investors to emulate. However, we also know that the returns of hedge funds on the whole have not been good for several years, having underperformed the market. We analyzed the historical stock picks of these investors and our research revealed that the small-cap picks of these funds performed far better than their large-cap picks, which is where most of their money is invested and why their performances as a whole have been poor. A portfolio of the 15 most popular small-cap stocks among hedge funds outperformed the S&P 500 Total Return Index by 95 basis points per month between 1999 and 2012. The exceptional results of this strategy got even better after it went live at the end of August 2012. A portfolio consisting of the 15 most popular small-cap stock picks among the funds we track has returned 123.1% and beaten the market by 66.5 percentage points since then, and by 4.6 percentage points in the first quarter of this year (see more details).

As mentioned above, smart money seem to like Analog Devices, Inc. (NASDAQ:ADI) as 22 investors held in aggregate around $987 million worth of stock at the end of March. On the other hand, the latest data show that Micron Technology, Inc. (NASDAQ:MU) saw a marked decrease in the total number of funds with long positions to 79 from 100 during the second quarter. These funds held about $3.73 billion worth of Micron shares at the end of June, a cut of over 46% from the previous quarter. In this way, even though Micron is more popular than ADI, the trend might be reversing.

William Von Mueffling’s Cantillon Capital Management is one of the largest shareholders of Analog Devices, Inc. (NASDAQ:ADI), owning 7.52 million shares worth about $482.54 million at the end of June. However, its stake was reduced by 217,700 shares over the quarter. In addition, Dmitry Balyasny’s Balyasny Asset Management initiated a stake and acquired about 1.78 million shares worth about $114.2 million, during the same period. Because hedge funds are showing more interest in Analog Devices, Inc. (NASDAQ:ADI) and the firm has reported solid quarterly results and is upbeat regarding its outlook, we see Analog Devices as a good stock to buy at the moment.

Disclosure: None

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