Did Hedge Funds Drop The Ball On Lattice Semiconductor Corporation (LSCC) ?

The latest 13F reporting period has come and gone, and Insider Monkey is again at the forefront when it comes to making use of this gold mine of data. We have processed the filings of the more than 700 world-class investment firms that we track and now have access to the collective wisdom contained in these filings, which are based on their June 28 holdings, data that is available nowhere else. Should you consider Lattice Semiconductor Corporation (NASDAQ:LSCC) for your portfolio? We’ll look to this invaluable collective wisdom for the answer.

Lattice Semiconductor Corporation (NASDAQ:LSCC) has seen a decrease in hedge fund interest in recent months. Our calculations also showed that LSCC isn’t among the 30 most popular stocks among hedge funds (see the video below).
5 Most Popular Stocks Among Hedge Funds
Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.

Hedge funds’ reputation as shrewd investors has been tarnished in the last decade as their hedged returns couldn’t keep up with the unhedged returns of the market indices. Our research has shown that hedge funds’ large-cap stock picks indeed failed to beat the market between 1999 and 2016. However, we were able to identify in advance a select group of hedge fund holdings that outperformed the market by 40 percentage points since May 2014 through May 30, 2019 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that’ll significantly underperform the market. We have been tracking and sharing the list of these stocks since February 2017 and they lost 25.7% through September 30, 2019. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.

Didric Cederholm Lion Point Capital

Unlike former hedge manager, Dr. Steve Sjuggerud, who is convinced Dow will soar past 40000, our long-short investment strategy doesn’t rely on bull markets to deliver double digit returns. We only rely on hedge fund buy/sell signals. Let’s take a look at the recent hedge fund action encompassing Lattice Semiconductor Corporation (NASDAQ:LSCC).

How have hedgies been trading Lattice Semiconductor Corporation (NASDAQ:LSCC)?

At the end of the second quarter, a total of 20 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -20% from one quarter earlier. By comparison, 13 hedge funds held shares or bullish call options in LSCC a year ago. So, let’s check out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

No of Hedge Funds with LSCC Positions

Of the funds tracked by Insider Monkey, Didric Cederholm’s Lion Point has the most valuable position in Lattice Semiconductor Corporation (NASDAQ:LSCC), worth close to $114.7 million, comprising 11.3% of its total 13F portfolio. Coming in second is Renaissance Technologies holding a $29.3 million position; less than 0.1%% of its 13F portfolio is allocated to the stock. Remaining members of the smart money that are bullish contain John Overdeck and David Siegel’s Two Sigma Advisors, Mike Masters’s Masters Capital Management and Joe Milano’s Greenhouse Funds.

Due to the fact that Lattice Semiconductor Corporation (NASDAQ:LSCC) has witnessed bearish sentiment from the aggregate hedge fund industry, it’s easy to see that there was a specific group of hedgies that slashed their full holdings by the end of the second quarter. At the top of the heap, Richard Driehaus’s Driehaus Capital dropped the largest position of the “upper crust” of funds followed by Insider Monkey, totaling about $8.9 million in stock, and Peter Muller’s PDT Partners was right behind this move, as the fund sold off about $5 million worth. These bearish behaviors are interesting, as aggregate hedge fund interest fell by 5 funds by the end of the second quarter.

Let’s check out hedge fund activity in other stocks similar to Lattice Semiconductor Corporation (NASDAQ:LSCC). These stocks are iRhythm Technologies, Inc. (NASDAQ:IRTC), Allscripts Healthcare Solutions Inc (NASDAQ:MDRX), Alexander’s, Inc. (NYSE:ALX), and Nevro Corp (NYSE:NVRO). All of these stocks’ market caps match LSCC’s market cap.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
IRTC 16 295163 -8
MDRX 18 219405 -3
ALX 4 72690 0
NVRO 28 549758 -4
Average 16.5 284254 -3.75

View table here if you experience formatting issues.

As you can see these stocks had an average of 16.5 hedge funds with bullish positions and the average amount invested in these stocks was $284 million. That figure was $240 million in LSCC’s case. Nevro Corp (NYSE:NVRO) is the most popular stock in this table. On the other hand Alexander’s, Inc. (NYSE:ALX) is the least popular one with only 4 bullish hedge fund positions. Lattice Semiconductor Corporation (NASDAQ:LSCC) is not the most popular stock in this group but hedge fund interest is still above average. Our calculations showed that top 20 most popular stocks among hedge funds returned 24.4% in 2019 through September 30th and outperformed the S&P 500 ETF (SPY) by 4 percentage points. Hedge funds were also right about betting on LSCC as the stock returned 25.4% during the third quarter and outperformed the market. Hedge funds were rewarded for their relative bullishness.

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