Do Hedge Funds Love Applied Materials, Inc. (AMAT)?

The latest 13F reporting period has come and gone, and Insider Monkey have plowed through 823 13F filings that hedge funds and well-known value investors are required to file by the SEC. The 13F filings show the funds’ and investors’ portfolio positions as of June 30th, when the S&P 500 Index was trading around the 3100 level. Since the end of March, investors decided to bet on the economic recovery and a stock market rebound. S&P 500 Index returned more than 50% since its bottom. In this article you are going to find out whether hedge funds thought Applied Materials, Inc. (NASDAQ:AMAT) was a good investment heading into the third quarter and how the stock traded in comparison to the top hedge fund picks.

Applied Materials, Inc. (NASDAQ:AMAT) investors should be aware of an increase in activity from the world’s largest hedge funds in recent months. Applied Materials, Inc. (NASDAQ:AMAT) was in 58 hedge funds’ portfolios at the end of June. The all time high for this statistics is 72. Our calculations also showed that AMAT isn’t among the 30 most popular stocks among hedge funds (click for Q2 rankings and see the video for a quick look at the top 5 stocks).

Video: Watch our video about the top 5 most popular hedge fund stocks.

To the average investor there are plenty of gauges shareholders can use to assess their holdings. Two of the best gauges are hedge fund and insider trading interest. Our researchers have shown that, historically, those who follow the top picks of the elite investment managers can outpace their index-focused peers by a healthy amount (see the details here).

At Insider Monkey we scour multiple sources to uncover the next great investment idea. Federal Reserve has been creating trillions of dollars electronically to keep the interest rates near zero. We believe this will lead to inflation and boost precious metals prices. So, we are checking out this junior gold mining stock.. We go through lists like the 10 most profitable companies in America to pick the best large-cap stocks to buy. Even though we recommend positions in only a tiny fraction of the companies we analyze, we check out as many stocks as we can. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. If you want to find out the best healthcare stock to buy right now, you can watch our latest hedge fund manager interview here. Keeping this in mind we’re going to take a glance at the fresh hedge fund action regarding Applied Materials, Inc. (NASDAQ:AMAT).

What have hedge funds been doing with Applied Materials, Inc. (NASDAQ:AMAT)?

At the end of the second quarter, a total of 58 of the hedge funds tracked by Insider Monkey were long this stock, a change of 4% from one quarter earlier. On the other hand, there were a total of 44 hedge funds with a bullish position in AMAT 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.

When looking at the institutional investors followed by Insider Monkey, David Goel and Paul Ferri’s Matrix Capital Management has the number one position in Applied Materials, Inc. (NASDAQ:AMAT), worth close to $297 million, corresponding to 4.6% of its total 13F portfolio. The second most bullish fund manager is AQR Capital Management, led by Cliff Asness, holding a $285.9 million position; the fund has 0.5% of its 13F portfolio invested in the stock. Some other hedge funds and institutional investors that are bullish consist of David Blood and Al Gore’s Generation Investment Management, William von Mueffling’s Cantillon Capital Management and Alex Snow’s Lansdowne Partners. In terms of the portfolio weights assigned to each position Lansdowne Partners allocated the biggest weight to Applied Materials, Inc. (NASDAQ:AMAT), around 9.05% of its 13F portfolio. Castle Hook Partners is also relatively very bullish on the stock, designating 5.79 percent of its 13F equity portfolio to AMAT.

As industrywide interest jumped, specific money managers have been driving this bullishness. Nishkama Capital, managed by Ravee Mehta, created the largest position in Applied Materials, Inc. (NASDAQ:AMAT). Nishkama Capital had $9.1 million invested in the company at the end of the quarter. Peter Muller’s PDT Partners also initiated a $8.7 million position during the quarter. The following funds were also among the new AMAT investors: Anand Parekh’s Alyeska Investment Group, Paul Holland and Matthew Miller’s Glaxis Capital Management, and Ben Levine, Andrew Manuel and Stefan Renold’s LMR Partners.

Let’s also examine hedge fund activity in other stocks – not necessarily in the same industry as Applied Materials, Inc. (NASDAQ:AMAT) but similarly valued. These stocks are Illinois Tool Works Inc. (NYSE:ITW), America Movil SAB de CV (NYSE:AMX), The Southern Company (NYSE:SO), Illumina, Inc. (NASDAQ:ILMN), Marsh & McLennan Companies, Inc. (NYSE:MMC), Uber Technologies, Inc. (NYSE:UBER), and Petroleo Brasileiro S.A. – Petrobras (NYSE:PBR). This group of stocks’ market caps resemble AMAT’s market cap.

View table here if you experience formatting issues.

As you can see these stocks had an average of 40.9 hedge funds with bullish positions and the average amount invested in these stocks was $1409 million. That figure was $2462 million in AMAT’s case. Uber Technologies, Inc. (NYSE:UBER) is the most popular stock in this table. On the other hand America Movil SAB de CV (NYSE:AMX) is the least popular one with only 11 bullish hedge fund positions. Applied Materials, Inc. (NASDAQ:AMAT) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for AMAT is 59.5. Stocks with higher number of hedge fund positions relative to other stocks as well as relative to their historical range receive a higher sentiment score. This is a slightly positive signal but we’d rather spend our time researching stocks that hedge funds are piling on. Our calculations showed that top 10 most popular stocks among hedge funds returned 41.4% in 2019 and outperformed the S&P 500 ETF (SPY) by 10.1 percentage points. These stocks gained 28.2% in 2020 through August 24th but beat the market by 20.6 percentage points. Unfortunately AMAT wasn’t nearly as popular as these 10 stocks and hedge funds that were betting on AMAT were disappointed as the stock returned 5.8% during the same time period and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 10 most popular stocks among hedge funds as many of these stocks already outperformed the market so far this year.

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