Insider Monkey has processed numerous 13F filings of hedge funds and famous investors to create an extensive database of hedge fund holdings. The 13F filings show the hedge funds’ and investors’ positions as of the end of the fourth quarter. You can find write-ups about an individual hedge fund’s trades on numerous financial news websites. However, in this article we will take a look at their collective moves and analyze what the smart money thinks of Advanced Micro Devices, Inc. (NASDAQ:AMD) based on that data.
Hedge fund interest in Advanced Micro Devices, Inc. (NASDAQ:AMD) shares was flat at the end of last quarter. This is usually a negative indicator. The level and the change in hedge fund popularity aren’t the only variables you need to analyze to decipher hedge funds’ perspectives. A stock may witness a boost in popularity but it may still be less popular than similarly priced stocks. That’s why at the end of this article we will examine companies such as SBA Communications Corporation (NASDAQ:SBAC), ORIX Corporation (NYSE:IX), and McCormick & Company, Incorporated (NYSE:MKC) to gather more data points.
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’ small-cap stock picks managed to beat the market by double digits annually between 1999 and 2016, but the margin of outperformance has been declining in recent years. Nevertheless, we were still able to identify in advance a select group of hedge fund holdings that outperformed the market by 32 percentage points since May 2014 through March 12, 2019 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that underperformed the market by 10 percentage points annually between 2006 and 2017. Interestingly the margin of underperformance of these stocks has been increasing in recent years. Investors who are long the market and short these stocks would have returned more than 27% annually between 2015 and 2017. We have been tracking and sharing the list of these stocks since February 2017 in our quarterly newsletter.
We’re going to view the new hedge fund action surrounding Advanced Micro Devices, Inc. (NASDAQ:AMD).
How are hedge funds trading Advanced Micro Devices, Inc. (NASDAQ:AMD)?
At the end of the fourth quarter, a total of 28 of the hedge funds tracked by Insider Monkey were long this stock, a change of 0% from one quarter earlier. By comparison, 31 hedge funds held shares or bullish call options in AMD a year ago. So, let’s review which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
According to Insider Monkey’s hedge fund database, Ken Griffin’s Citadel Investment Group has the largest call position in Advanced Micro Devices, Inc. (NASDAQ:AMD), worth close to $224.9 million, accounting for 0.1% of its total 13F portfolio. On Citadel Investment Group’s heels is Polar Capital, led by Brian Ashford-Russell and Tim Woolley, holding a $77.1 million position; 0.8% of its 13F portfolio is allocated to the stock. Remaining peers that are bullish consist of Matthew Hulsizer’s PEAK6 Capital Management, and Peter Rathjens, Bruce Clarke and John Campbell’s Arrowstreet Capital.
Due to the fact that Advanced Micro Devices, Inc. (NASDAQ:AMD) has experienced declining sentiment from the entirety of the hedge funds we track, we can see that there was a specific group of money managers who were dropping their positions entirely heading into Q3. Intriguingly, Nick Niell’s Arrowgrass Capital Partners dropped the largest position of the 700 funds watched by Insider Monkey, valued at an estimated $96.5 million in stock, and Ken Griffin’s Citadel Investment Group was right behind this move, as the fund dumped about $77.2 million worth. These bearish behaviors are interesting, as aggregate hedge fund interest stayed the same (this is a bearish signal in our experience).
Let’s check out hedge fund activity in other stocks – not necessarily in the same industry as Advanced Micro Devices, Inc. (NASDAQ:AMD) but similarly valued. These stocks are SBA Communications Corporation (NASDAQ:SBAC), ORIX Corporation (NYSE:IX), McCormick & Company, Incorporated (NYSE:MKC), and Rockwell Automation Inc. (NYSE:ROK). This group of stocks’ market valuations are closest to AMD’s market valuation.
|Ticker||No of HFs with positions||Total Value of HF Positions (x1000)||Change in HF Position|
View table here if you experience formatting issues.
As you can see these stocks had an average of 25.5 hedge funds with bullish positions and the average amount invested in these stocks was $609 million. That figure was $340 million in AMD’s case. Rockwell Automation Inc. (NYSE:ROK) is the most popular stock in this table. On the other hand ORIX Corporation (NYSE:IX) is the least popular one with only 7 bullish hedge fund positions. Advanced Micro Devices, Inc. (NASDAQ:AMD) is not the most popular stock in this group but hedge fund interest is still above average. Our calculations showed that top 15 most popular stocks among hedge funds returned 19.7% through March 15th and outperformed the S&P 500 ETF (SPY) by 6.6 percentage points. Hedge funds were also right about betting on AMD as the stock returned 26.2% and outperformed the market as well.
Disclosure: None. This article was originally published at Insider Monkey.