At Insider Monkey, we pore over the filings of more than 700 top investment firms every quarter, a process we have now completed for the latest reporting period. The data we’ve gathered as a result gives us access to a wealth of collective knowledge based on these firms’ portfolio holdings as of September 30. In this article, we will use that wealth of knowledge to determine whether or not ARM Holdings plc (ADR) (NASDAQ:ARMH) makes for a good investment right now.
Is ARM Holdings plc (ADR) (NASDAQ:ARMH) a buy right now? The smart money is in a bearish mood. The number of bullish hedge fund positions dropped by 4 recently. At the end of this article we will also compare ARMH to other stocks including Fiserv, Inc. (NASDAQ:FISV), Aviva Plc (ADR) (NYSE:AV), and NXP Semiconductors NV (NASDAQ:NXPI) to get a better sense of its popularity.
Follow A R M Holdings Plc (NASDAQ:ARMH)
Follow A R M Holdings Plc (NASDAQ:ARMH)
According to most traders, hedge funds are assumed to be unimportant, outdated financial tools of yesteryear. While there are greater than an 8000 funds in operation at present, Our experts hone in on the elite of this group, around 700 funds. It is estimated that this group of investors administer bulk of the smart money’s total asset base, and by paying attention to their unrivaled equity investments, Insider Monkey has spotted numerous investment strategies that have historically defeated the market. Insider Monkey’s small-cap hedge fund strategy defeated the S&P 500 index by 12 percentage points a year for a decade in their back tests.
Now, we’re going to take a gander at the new action regarding ARM Holdings plc (ADR) (NASDAQ:ARMH).
What have hedge funds been doing with ARM Holdings plc (ADR) (NASDAQ:ARMH)?
At Q3’s end, a total of 17 of the hedge funds tracked by Insider Monkey were bullish on this stock, a drop of 19% from the previous quarter. With hedge funds’ sentiment swirling, there exists a few key hedge fund managers who were upping their stakes considerably (or already accumulated large positions).
Of the funds tracked by Insider Monkey, Fisher Asset Management, managed by Ken Fisher, holds the biggest position in ARM Holdings plc (ADR) (NASDAQ:ARMH). According to its latest quarterly report, the fund has a $56.7 million position in the stock, comprising 0.1% of its 13F portfolio. The second most bullish fund manager is GLG Partners, managed by Noam Gottesman, which holds a $49.1 million call position; the fund has 1.3% of its 13F portfolio invested in the stock. Some other hedge funds and institutional investors that hold long positions contain Malcolm Fairbairn’s Ascend Capital, Peter Rathjens, Bruce Clarke and John Campbell’s Arrowstreet Capital and Israel Englander’s Millennium Management.
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.
