Five Cheap Tech Stocks Hedge Funds Like

As our world continues to become more and more tech-oriented, our demand for products ranging from smartphones, to semiconductors, to software and apps continues to rise. This makes investing in companies operating in the sector potentially quite lucrative, given their ongoing growth potential. This is especially true of smaller companies which traditionally have cheaper share prices as well. With this in mind, we have uncovered a list of five cheap tech stocks that have earned the biggest vote of confidence from the pool of money managers that we track here at Insider Monkey. We’ll discuss these five stocks below, all of which are priced at under $10 per share, affording investors the chance to diversify their portfolios on the cheap.

Our research determined that following the small-cap stocks that hedge funds are collectively bullish on can help a smaller investor beat the S&P 500 by around 95 basis points per month (see more details here).

#5 Intralinks Holdings Inc (NYSE:IL)

 – Investors with Long Positions (as of December 31): 25

 – Aggregate Value of Investors’ Holdings (as of December 31): $140.13 Million

Collectively, hedgies in our database held about 26.5% of Intralinks’ outstanding float at the end of December. Though the number of hedge funds bullish on the New York-based provider of Software-as-a-Service (SaaS) solutions dropped by one during the October-to-December period, the aggregate value of their investments rose by 11%, mostly on the back of a 9.4% gain in the stock during the period. In its financial results for the fourth quarter Intralinks Holdings Inc (NYSE:IL) delivered EPS of $0.02, which missed estimates by $0.01, while quarterly revenue of $71.28 million was $0.87 million above expectations and marked an increase of 6% year-over-year. In addition, the company significantly increased its guidance for fiscal year 2016 and also initiated a $20 million stock repurchase program. Peter S. Park‘s Park West Asset Management hiked its Intralinks Holdings Inc (NYSE:IL) position by 29% to 2.64 million shares during the fourth quarter.

#4 Nokia Corporation (ADR) (NYSE:NOK)

 – Investors with Long Positions (as of December 31): 26

 – Aggregate Value of Investors’ Holdings (as of December 31): $462.10 Million

Nokia’s stock gained back some ground in the fourth quarter, rising by 3.5%, though it’s still down by 14% over the past year. During the quarter, the number of investors in our database long the stock rose by two, while the aggregate value of their holdings inched up by 2.6%. Nokia Corporation (ADR) (NYSE:NOK)’s stock came under fire in February when a patent dispute with Samsung fell short of the payoff that analysts expected. The Finnish telecom company is hurrying to complete its acquisition of Alcatel-Lucent, with it currently owning about 87.33% of the French company’s shares on a fully diluted basis. Spencer M. Waxman‘s Shannon River Fund Management upped its stake in Nokia Corporation (ADR) (NYSE:NOK) by 124% to 2.8 million shares during the fourth quarter.

 

#3 Atmel Corporation (NASDAQ:ATML)

 – Investors with Long Positions (as of December 31): 33

 – Aggregate Value of Investors’ Holdings (as of December 31): $898.68 Million

There was a surge in hedge fund interest pertaining to Atmel Corporation (NASDAQ:ATML) during the fourth quarter, as evidenced by the towering 238% rise in the aggregate value of their holdings in the stock, despite the total number of investors holding the stock in their portfolios dropping by two. The stock price nearly doubled during this period, seemingly prompting some money managers to take profit off the table, while others doubled down. However, in a rare twist, Atmel agreed to be acquired by chipmaker Microchip Technology Inc. (NASDAQ:MCHP) in January, in a deal that was actually worth less than its share price at the time, although it should be noted that shares were already inflated due to the bidding war for the company being waged by Microchip and Dialog Semiconductor. Nick Neil‘s Arrowgrass Capital Partners hiked its Atmel Corporation (NASDAQ:ATML) stake by 321% to 20.12 million shares in the fourth trimester.

#2 ON Semiconductor Corp (NASDAQ:ON)

 – Investors with Long Positions (as of December 31): 34

 – Aggregate Value of Investors’ Holdings (as of December 31): $406.54 Million

The number of hedge funds long ON Semiconductor Corp (NASDAQ:ON) increased by five during the fourth quarter, though the aggregate value of their holdings dropped by 27%. Shares of the Phoenix, Arizona-based company have slumped by more than 26% in the last 12 months, but analysts believe that inventory has now bottomed out, after weak demand stifled sales and inventory corrections in its distributions channel had to be made by the company’s management. Moreover, despite those headwinds, sales from ON’s automotive segment have remained strong, and according to analysts, they will be a strong driver for the company in 2016 as well. Pzena Investment Management, which is led by Richard S. Pzena holds 11.15 million shares of ON Semiconductor Corp (NASDAQ:ON) valued at $109.29 million.

#1 Sunedison Inc (NYSE:SUNE)

 – Investors with Long Positions (as of December 31): 50

 – Aggregate Value of Investors’ Holdings (as of December 31): $512.32 Million

Considering that shares of the $654 million provider of photovoltaic energy solutions have cratered by more than 91% during the past 12 months, it is not surprising that the number of hedgies backing the company fell by 23 during the fourth quarter, along with a 52% slide in the aggregate value of their holdings. High debt management risk and weak operating cash flow are some of the reasons that have contributed to the precipitous slide. However, shares of Sunedison Inc (NYSE:SUNE) recently received a much needed breather when Vivint Solar (NYSE:VSLR) terminated an agreement to be acquired by Sunedison, citing that the company failed to “meet its obligations under the merger agreement”. The news was a blessing for Sunedison’s shareholders, as the company didn’t have funds to acquire Vivint Solar in the first place. David Gallo‘s Valinor Management increased its stake in Sunedison Inc (NYSE:SUNE) by 43% to 22.24 million shares during the fourth trimester.

Disclosure: None