Our extensive research has shown that imitating the smart money can generate significant returns for retail investors, which is why we track nearly 900 active prominent money managers and analyze their quarterly 13F filings. The stocks that are heavily bought by hedge funds historically outperformed the market, though there is no shortage of high profile failures like hedge funds’ 2018 losses in Facebook and Apple. Let’s take a closer look at what the funds we track think about Microchip Technology Incorporated (NASDAQ:MCHP) in this article.
Is Microchip Technology Incorporated (NASDAQ:MCHP) the right pick for your portfolio? The best stock pickers were getting less bullish. The number of long hedge fund positions decreased by 9 lately. Microchip Technology Incorporated (NASDAQ:MCHP) was in 41 hedge funds’ portfolios at the end of the third quarter of 2021. The all time high for this statistic is 50. Our calculations also showed that MCHP isn’t among the 30 most popular stocks among hedge funds (click for Q3 rankings). There were 50 hedge funds in our database with MCHP positions at the end of the second quarter.
At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, lithium prices have more than doubled over the past year, so we go through lists like the 10 best EV stocks to pick the next Tesla that will deliver a 10x return. Even though we recommend positions in only a tiny fraction of the companies we analyze, we check out as many stocks as we can. Keeping this in mind let’s take a look at the recent hedge fund action regarding Microchip Technology Incorporated (NASDAQ:MCHP).
Do Hedge Funds Think MCHP Is A Good Stock To Buy Now?
At the end of September, a total of 41 of the hedge funds tracked by Insider Monkey were long this stock, a change of -18% from the second quarter of 2021. Below, you can check out the change in hedge fund sentiment towards MCHP over the last 25 quarters. With hedgies’ positions undergoing their usual ebb and flow, there exists an “upper tier” of notable hedge fund managers who were upping their holdings significantly (or already accumulated large positions).
When looking at the institutional investors followed by Insider Monkey, Platinum Asset Management, managed by Kerr Neilson, holds the most valuable position in Microchip Technology Incorporated (NASDAQ:MCHP). Platinum Asset Management has a $301.8 million position in the stock, comprising 8.5% of its 13F portfolio. The second most bullish fund manager is Two Sigma Advisors, led by John Overdeck and David Siegel, holding a $215.6 million position; the fund has 0.6% of its 13F portfolio invested in the stock. Remaining peers with similar optimism encompass Steve Cohen’s Point72 Asset Management, Ken Griffin’s Citadel Investment Group and David Blood and Al Gore’s Generation Investment Management. In terms of the portfolio weights assigned to each position Glaxis Capital Management allocated the biggest weight to Microchip Technology Incorporated (NASDAQ:MCHP), around 13.16% of its 13F portfolio. Platinum Asset Management is also relatively very bullish on the stock, dishing out 8.5 percent of its 13F equity portfolio to MCHP.
Judging by the fact that Microchip Technology Incorporated (NASDAQ:MCHP) has experienced falling interest from the aggregate hedge fund industry, it’s easy to see that there were a few money managers that slashed their positions entirely heading into Q4. Intriguingly, Joshua Friedman and Mitchell Julis’s Canyon Capital Advisors sold off the biggest stake of all the hedgies tracked by Insider Monkey, worth about $135.8 million in stock. Donald Sussman’s fund, Paloma Partners, also dropped its stock, about $123.9 million worth. These bearish behaviors are important to note, as total hedge fund interest was cut by 9 funds heading into Q4.
Let’s check out hedge fund activity in other stocks – not necessarily in the same industry as Microchip Technology Incorporated (NASDAQ:MCHP) but similarly valued. We will take a look at Vodafone Group Plc (NASDAQ:VOD), Biogen Inc. (NASDAQ:BIIB), O’Reilly Automotive Inc (NASDAQ:ORLY), Cadence Design Systems Inc (NASDAQ:CDNS), Roku, Inc. (NASDAQ:ROKU), Schlumberger Limited. (NYSE:SLB), and Lucid Group Inc. (NASDAQ:LCID). This group of stocks’ market caps are similar to MCHP’s market cap.
|Ticker||No of HFs with positions||Total Value of HF Positions (x1000)||Change in HF Position|
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As you can see these stocks had an average of 39.3 hedge funds with bullish positions and the average amount invested in these stocks was $1583 million. That figure was $1122 million in MCHP’s case. Biogen Inc. (NASDAQ:BIIB) is the most popular stock in this table. On the other hand Vodafone Group Plc (NASDAQ:VOD) is the least popular one with only 18 bullish hedge fund positions. Microchip Technology Incorporated (NASDAQ:MCHP) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for MCHP is 44.6. 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. Our calculations showed that top 5 most popular stocks among hedge funds returned 95.8% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 40 percentage points. These stocks gained 28.6% in 2021 through November 30th and still beat the market by 5.6 percentage points. Hedge funds were also right about betting on MCHP as the stock returned 9% since the end of Q3 (through 11/30) and outperformed the market. Hedge funds were rewarded for their relative bullishness.
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Disclosure: None. This article was originally published at Insider Monkey.