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Do Hedge Funds Love ARM Holdings plc (ADR) (ARMH)?

Due to the fact that ARM Holdings plc (ADR) (NASDAQ:ARMH) has faced a declination in interest from the aggregate hedge fund industry, it’s easy to see that there is a sect of money managers who sold off their entire stakes heading into Q4. It’s worth mentioning that D. E. Shaw’s D E Shaw dumped the largest investment of the 700 funds monitored by Insider Monkey, totaling close to $14.2 million in stock, and John Burbank’s Passport Capital was right behind this move, as the fund dropped about $8.1 million worth of shares. These moves are intriguing to say the least, as total hedge fund interest was cut by 4 funds heading into Q4.

Let’s now review hedge fund activity in other stocks – not necessarily in the same industry as ARM Holdings plc (ADR) (NASDAQ:ARMH) but similarly valued. These stocks are Fiserv, Inc. (NASDAQ:FISV), Aviva Plc (ADR) (NYSE:AV), NXP Semiconductors NV (NASDAQ:NXPI), and The Hershey Company (NYSE:HSY). This group of stocks’ market values are similar to ARMH’s market value.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
FISV 21 360513 -1
AV 7 3969 -1
NXPI 59 3188631 -10
HSY 18 456777 -6

As you can see these stocks had an average of 26 hedge funds with bullish positions and the average amount invested in these stocks was a little over $1 billion. That figure was just $244 million in ARMH’s case. NXP Semiconductors NV (NASDAQ:NXPI) is the most popular stock in this table, while Aviva Plc (ADR) (NYSE:AV) is the laggard with only 7 bullish hedge fund positions. ARM Holdings plc (ADR) (NASDAQ:ARMH) is not the least popular stock in this group, but hedge fund interest is still below average. This is a slightly negative signal and we’d rather spend our time researching stocks that hedge funds are piling on. In this regard NXPI might be a better candidate to consider a long position.

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