Hedge Funds Are Dumping Lam Research Corporation (LRCX)

Before we spend countless hours researching a company, we like to analyze what insiders, hedge funds and billionaire investors think of the stock first. This is a necessary first step in our investment process because our research has shown that the elite investors’ consensus returns have been exceptional. In the following paragraphs, we find out what the billionaire investors and hedge funds think of Lam Research Corporation (NASDAQ:LRCX).

Lam Research Corporation (NASDAQ:LRCX) was in 47 hedge funds’ portfolios at the end of September. The all time high for this statistic is 62. LRCX investors should pay attention to a decrease in activity from the world’s largest hedge funds in recent months. There were 58 hedge funds in our database with LRCX positions at the end of the second quarter. Our calculations also showed that LRCX isn’t among the 30 most popular stocks among hedge funds (click for Q3 rankings).

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. With all of this in mind we’re going to go over the latest hedge fund action regarding Lam Research Corporation (NASDAQ:LRCX).


Philippe Laffont of Coatue Management

Do Hedge Funds Think LRCX Is A Good Stock To Buy Now?

At Q3’s end, a total of 47 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -19% from the second quarter of 2021. Below, you can check out the change in hedge fund sentiment towards LRCX over the last 25 quarters. So, let’s examine which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

Among these funds, Fisher Asset Management held the most valuable stake in Lam Research Corporation (NASDAQ:LRCX), which was worth $992.8 million at the end of the third quarter. On the second spot was GQG Partners which amassed $560.1 million worth of shares. Citadel Investment Group, Alkeon Capital Management, and Coatue 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 Marlowe Partners allocated the biggest weight to Lam Research Corporation (NASDAQ:LRCX), around 19.74% of its 13F portfolio. Crosslink Capital is also relatively very bullish on the stock, dishing out 7.93 percent of its 13F equity portfolio to LRCX.

Due to the fact that Lam Research Corporation (NASDAQ:LRCX) has witnessed a decline in interest from hedge fund managers, it’s easy to see that there is a sect of money managers that decided to sell off their positions entirely in the third quarter. Interestingly, Zach Schreiber’s Point State Capital dumped the biggest investment of the “upper crust” of funds followed by Insider Monkey, totaling about $95 million in stock, and Suzi Nutton (CEO)’s Lansdowne Partners was right behind this move, as the fund cut about $94.6 million worth. These transactions are intriguing to say the least, as aggregate hedge fund interest was cut by 11 funds in the third quarter.

Let’s now review hedge fund activity in other stocks – not necessarily in the same industry as Lam Research Corporation (NASDAQ:LRCX) but similarly valued. We will take a look at Micron Technology, Inc. (NASDAQ:MU), Dell Technologies Inc. (NYSE:DELL), The TJX Companies, Inc. (NYSE:TJX), Truist Financial Corporation (NYSE:TFC), HCA Healthcare Inc (NYSE:HCA), Zoom Video Communications, Inc. (NASDAQ:ZM), and Marsh & McLennan Companies, Inc. (NYSE:MMC). This group of stocks’ market valuations are closest to LRCX’s market valuation.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
MU 63 3841359 -24
DELL 60 6142951 -2
TJX 63 2330294 7
TFC 34 275906 -5
HCA 72 3309822 12
ZM 56 6003836 -3
MMC 42 1987176 1
Average 55.7 3413049 -2

View table here if you experience formatting issues.

As you can see these stocks had an average of 55.7 hedge funds with bullish positions and the average amount invested in these stocks was $3413 million. That figure was $3519 million in LRCX’s case. HCA Healthcare Inc (NYSE:HCA) is the most popular stock in this table. On the other hand Truist Financial Corporation (NYSE:TFC) is the least popular one with only 34 bullish hedge fund positions. Lam Research Corporation (NASDAQ:LRCX) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for LRCX is 33.8. 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. A small number of hedge funds were also right about betting on LRCX as the stock returned 19.5% since the end of the third quarter (through 11/30) and outperformed the market by an even larger margin.

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