The financial regulations require hedge funds and wealthy investors that exceeded the $100 million holdings threshold to file a report that shows their positions at the end of every quarter. Even though it isn’t the intention, these filings to a certain extent level the playing field for ordinary investors. The latest round of 13F filings disclosed the funds’ positions on March 31st. We at Insider Monkey have made an extensive database of more than 866 of those established hedge funds and famous value investors’ filings. In this article, we analyze how these elite funds and prominent investors traded Monolithic Power Systems, Inc. (NASDAQ:MPWR) based on those filings.
Monolithic Power Systems, Inc. (NASDAQ:MPWR) was in 32 hedge funds’ portfolios at the end of March. The all time high for this statistic is 37. MPWR shareholders have witnessed an increase in enthusiasm from smart money lately. There were 30 hedge funds in our database with MPWR holdings at the end of December. Our calculations also showed that MPWR isn’t among the 30 most popular stocks among hedge funds (click for Q1 rankings).
So, why do we pay attention to hedge fund sentiment before making any investment decisions? Our research has shown that hedge funds’ small-cap stock picks managed to beat the market by double digits annually between 1999 and 2016, but the margin of outperformance has been declining in recent years. Nevertheless, we were still able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by more than 115 percentage points since March 2017 (see the details here). We have been able to outperform the passive index funds by tracking the moves of corporate insiders and hedge funds, and we believe small investors can benefit a lot from reading hedge fund investor letters and 13F filings.
At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, lithium mining is one of the fastest growing industries right now, so we are checking out stock pitches like this emerging lithium stock. 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. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. You can subscribe to our free daily newsletter on our homepage. With all of this in mind we’re going to review the latest hedge fund action regarding Monolithic Power Systems, Inc. (NASDAQ:MPWR).
Do Hedge Funds Think MPWR Is A Good Stock To Buy Now?
At Q1’s end, a total of 32 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 7% from one quarter earlier. Below, you can check out the change in hedge fund sentiment towards MPWR over the last 23 quarters. With hedge funds’ capital changing hands, there exists a few key hedge fund managers who were boosting their stakes meaningfully (or already accumulated large positions).
More specifically, Impax Asset Management was the largest shareholder of Monolithic Power Systems, Inc. (NASDAQ:MPWR), with a stake worth $165.3 million reported as of the end of March. Trailing Impax Asset Management was Polar Capital, which amassed a stake valued at $75.2 million. Cavalry Asset Management, Millennium Management, and AQR Capital Management were also very fond of the stock, becoming one of the largest hedge fund holders of the company. In terms of the portfolio weights assigned to each position Cavalry Asset Management allocated the biggest weight to Monolithic Power Systems, Inc. (NASDAQ:MPWR), around 5.8% of its 13F portfolio. Navellier & Associates is also relatively very bullish on the stock, dishing out 1.36 percent of its 13F equity portfolio to MPWR.
Consequently, specific money managers have been driving this bullishness. Adage Capital Management, managed by Phill Gross and Robert Atchinson, established the largest position in Monolithic Power Systems, Inc. (NASDAQ:MPWR). Adage Capital Management had $13.4 million invested in the company at the end of the quarter. Richard SchimeláandáLawrence Sapanski’s Cinctive Capital Management also initiated a $5.6 million position during the quarter. The other funds with brand new MPWR positions are Matthew Hulsizer’s PEAK6 Capital Management, John Overdeck and David Siegel’s Two Sigma Advisors, and Israel Englander’s Millennium Management.
Let’s go over hedge fund activity in other stocks – not necessarily in the same industry as Monolithic Power Systems, Inc. (NASDAQ:MPWR) but similarly valued. These stocks are RLX Technology Inc. (NYSE:RLX), PTC Inc (NASDAQ:PTC), Huntington Bancshares Incorporated (NASDAQ:HBAN), Clarivate Plc (NYSE:CLVT), HEICO Corporation (NYSE:HEI), Omnicom Group Inc. (NYSE:OMC), and IDEX Corporation (NYSE:IEX). This group of stocks’ market values match MPWR’s market value.
|Ticker||No of HFs with positions||Total Value of HF Positions (x1000)||Change in HF Position|
View table here if you experience formatting issues.
As you can see these stocks had an average of 29.4 hedge funds with bullish positions and the average amount invested in these stocks was $1263 million. That figure was $531 million in MPWR’s case. HEICO Corporation (NYSE:HEI) is the most popular stock in this table. On the other hand IDEX Corporation (NYSE:IEX) is the least popular one with only 19 bullish hedge fund positions. Monolithic Power Systems, Inc. (NASDAQ:MPWR) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for MPWR is 57.9. 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 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 22.8% in 2021 through July 2nd and beat the market again by 6 percentage points. Unfortunately MPWR wasn’t nearly as popular as these 5 stocks and hedge funds that were betting on MPWR were disappointed as the stock returned 6.7% since the end of March (through 7/2) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 5 most popular stocks among hedge funds as many of these stocks already outperformed the market since 2019.
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Disclosure: None. This article was originally published at Insider Monkey.