The elite funds run by legendary investors such as Dan Loeb and David Tepper make hundreds of millions of dollars for themselves and their investors by spending enormous resources doing research on small cap stocks that big investment banks don’t follow. Because of their pay structures, they have strong incentive to do the research necessary to beat the market. That’s why we pay close attention to what they think in small cap stocks. In this article, we take a closer look at Applied Materials, Inc. (NASDAQ:AMAT) from the perspective of those elite funds.
So, is Applied Materials, Inc. (NASDAQ:AMAT) a first-rate investment today? Hedge funds are getting more optimistic, as the number of bullish hedge fund bets advanced by 10 to 57 during the third quarter. At the end of this article we will also compare AMAT to other stocks including Prologis Inc (NYSE:PLD), V.F. Corporation (NYSE:VFC), and PPL Corporation (NYSE:PPL) 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, we’re going to take a look at the recent action surrounding Applied Materials, Inc. (NASDAQ:AMAT).
How have hedgies been trading Applied Materials, Inc. (NASDAQ:AMAT)?
A total of 57 investors from the Insider Monkey database were bullish on Applied Materials at the end of September, up by 21% over the quarter. With hedgies’ sentiment swirling, there exists an “upper tier” of key hedge fund managers who were upping their stakes considerably (or already accumulated large positions).
Of the funds tracked by Insider Monkey, Cliff Asness’ AQR Capital Management has the largest position in Applied Materials, Inc. (NASDAQ:AMAT), worth close to $422.3 million, comprising 0.6% of its total 13F portfolio. The second most bullish fund manager is David E. Shaw’s D. E. Shaw, which holds a $335.7 million position; 0.6% of its 13F portfolio is allocated to the company. Some other professional money managers with similar optimism comprise Israel Englander’s Millennium Management, Ken Griffin’s Citadel Investment Group and John Overdeck and David Siegel’s Two Sigma Advisors.
With a general bullishness amongst the heavyweights, specific money managers were breaking ground themselves. Capital Growth Management, led by Ken Heebner, assembled the most valuable position in Applied Materials, Inc. (NASDAQ:AMAT). Capital Growth Management had $66.9 million invested in the company at the end of the quarter. Mike Masters’ Masters Capital Management also made a $30.2 million investment in the stock during the quarter. Two other funds with new positions in the stock are Stanley Druckenmiller’s Duquesne Capital and Charles Clough’s Clough Capital Partners.
Let’s now review hedge fund activity in other stocks similar to Applied Materials, Inc. (NASDAQ:AMAT). These stocks are Prologis Inc (NYSE:PLD), V.F. Corporation (NYSE:VFC), PPL Corporation (NYSE:PPL), and Deere & Company (NYSE:DE). All of these stocks’ market caps are similar to AMAT’s market cap.
|Ticker||No of HFs with positions||Total Value of HF Positions (x1000)||Change in HF Position|
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 $1.21 billion at the end of September. That figure was $2.53 billion in AMAT’s case. Deere & Company (NYSE:DE) is the most popular stock in this table. On the other hand Prologis Inc (NYSE:PLD) is the least popular one with only 17 bullish hedge fund positions. Compared to these stocks Applied Materials, Inc. (NASDAQ:AMAT) is more popular among hedge funds. Considering that hedge funds are fond of this stock in relation to its market cap peers, it may be a good idea to analyze it in detail and potentially include it in your portfolio.