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Hedge Funds Are Crazy About Micron Technology, Inc. (MU)

We are still in an overall bull market and many stocks that smart money investors were piling into surged through November 22nd. Among them, Facebook and Microsoft ranked among the top 3 picks and these stocks gained 52% and 49% respectively. Hedge funds’ top 3 stock picks returned 39.1% this year and beat the S&P 500 ETFs by nearly 13 percentage points. Investing in index funds guarantees you average returns, not superior returns. We are looking to generate superior returns for our readers. That’s why we believe it isn’t a waste of time to check out hedge fund sentiment before you invest in a stock like Micron Technology, Inc. (NASDAQ:MU).

Is Micron Technology, Inc. (NASDAQ:MU) ready to rally soon? Prominent investors are taking an optimistic view. The number of long hedge fund positions moved up by 5 lately. Our calculations also showed that MU isn’t among the 30 most popular stocks among hedge funds.

To the average investor there are dozens of signals stock traders put to use to analyze stocks. Some of the most underrated signals are hedge fund and insider trading activity. Our researchers have shown that, historically, those who follow the best picks of the top investment managers can outperform the market by a very impressive margin (see the details here).

COATUE MANAGEMENT

Philippe Laffont of Coatue Management

Unlike the largest US hedge funds that are convinced Dow will soar past 40,000 or the world’s most bearish hedge fund that’s more convinced than ever that a crash is coming, our long-short investment strategy doesn’t rely on bull or bear markets to deliver double digit returns. We only rely on the best performing hedge funds‘ buy/sell signals. Let’s view the new hedge fund action encompassing Micron Technology, Inc. (NASDAQ:MU).

What have hedge funds been doing with Micron Technology, Inc. (NASDAQ:MU)?

At the end of the third quarter, a total of 67 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 8% from one quarter earlier. By comparison, 59 hedge funds held shares or bullish call options in MU a year ago. With hedgies’ positions undergoing their usual ebb and flow, there exists an “upper tier” of notable hedge fund managers who were upping their holdings considerably (or already accumulated large positions).

MU_nov2019

According to publicly available hedge fund and institutional investor holdings data compiled by Insider Monkey, Renaissance Technologies has the number one position in Micron Technology, Inc. (NASDAQ:MU), worth close to $537.9 million, accounting for 0.5% of its total 13F portfolio. The second most bullish fund manager is Cliff Asness of AQR Capital Management, with a $492.6 million position; 0.6% of its 13F portfolio is allocated to the stock. Remaining peers with similar optimism encompass Ken Griffin’s Citadel Investment Group, David E. Shaw’s D E Shaw and David Goel and Paul Ferri’s Matrix Capital Management. In terms of the portfolio weights assigned to each position Pabrai Funds allocated the biggest weight to Micron Technology, Inc. (NASDAQ:MU), around 29.42% of its portfolio. Appaloosa Management is also relatively very bullish on the stock, setting aside 7.53 percent of its 13F equity portfolio to MU.

With a general bullishness amongst the heavyweights, key hedge funds have been driving this bullishness. Jericho Capital Asset Management, managed by Josh Resnick, initiated the most outsized position in Micron Technology, Inc. (NASDAQ:MU). Jericho Capital Asset Management had $47.7 million invested in the company at the end of the quarter. Richard Driehaus’s Driehaus Capital also initiated a $19.5 million position during the quarter. The other funds with new positions in the stock are Kevin Cottrell and Chris LaSusa’s KCL Capital, Kevin Cottrell and Chris LaSusa’s KCL Capital, and Philippe Laffont’s Coatue Management.

Let’s go over hedge fund activity in other stocks – not necessarily in the same industry as Micron Technology, Inc. (NASDAQ:MU) but similarly valued. We will take a look at Schlumberger Limited. (NYSE:SLB), Bank of Montreal (NYSE:BMO), Exelon Corporation (NASDAQ:EXC), and Sumitomo Mitsui Financial Grp, Inc. (NYSE:SMFG). This group of stocks’ market values resemble MU’s market value.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
SLB 49 1246666 8
BMO 14 393078 1
EXC 34 2029376 2
SMFG 10 553308 -4
Average 26.75 1055607 1.75

View table here if you experience formatting issues.

As you can see these stocks had an average of 26.75 hedge funds with bullish positions and the average amount invested in these stocks was $1056 million. That figure was $3621 million in MU’s case. Schlumberger Limited. (NYSE:SLB) is the most popular stock in this table. On the other hand Sumitomo Mitsui Financial Grp, Inc. (NYSE:SMFG) is the least popular one with only 10 bullish hedge fund positions. Compared to these stocks Micron Technology, Inc. (NASDAQ:MU) is more popular among hedge funds. Our calculations showed that top 20 most popular stocks among hedge funds returned 34.7% in 2019 through November 22nd and outperformed the S&P 500 ETF (SPY) by 8.5 percentage points. Hedge funds were also right about betting on MU, though not to the same extent, as the stock returned 7% during the fourth quarter (through 11/22) and outperformed the market as well.

Disclosure: None. This article was originally published at Insider Monkey.

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