We hate to say this but, we told you so. On February 27th we published an article with the title Recession is Imminent: We Need A Travel Ban NOW and predicted a US recession when the S&P 500 Index was trading at the 3150 level. We also told you to short the market and buy long-term Treasury bonds. Our article also called for a total international travel ban. While we were warning you, President Trump minimized the threat and failed to act promptly. As a result of his inaction, we will now experience a deeper recession (read our latest 10 coronavirus predictions).
In these volatile markets we scrutinize hedge fund filings to get a reading on which direction each stock might be going. Insider Monkey has processed numerous 13F filings of hedge funds and successful value investors to create an extensive database of hedge fund holdings. The 13F filings show the hedge funds’ and successful investors’ positions as of the end of the fourth quarter. You can find articles about an individual hedge fund’s trades on numerous financial news websites. However, in this article we will take a look at their collective moves over the last 4 years and analyze what the smart money thinks of Marvell Technology Group Ltd. (NASDAQ:MRVL) based on that data.
Is Marvell Technology Group Ltd. (NASDAQ:MRVL) worth your attention right now? The smart money is getting less bullish. The number of long hedge fund positions dropped by 5 in recent months. Our calculations also showed that MRVL isn’t among the 30 most popular stocks among hedge funds (click for Q4 rankings and see the video below for Q3 rankings). MRVL was in 29 hedge funds’ portfolios at the end of the fourth quarter of 2019. There were 34 hedge funds in our database with MRVL holdings at the end of the previous quarter.
In the financial world there are tons of tools investors put to use to size up publicly traded companies. A duo of the most innovative tools are hedge fund and insider trading activity. Our experts have shown that, historically, those who follow the best picks of the best investment managers can outclass the market by a superb amount (see the details here).
Ken Griffin of Citadel Investment Group
We leave no stone unturned when looking for the next great investment idea. For example we recently identified a stock that trades 25% below the net cash on its balance sheet. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences, and go through short-term trade recommendations like this one. We even check out the recommendations of services with hard to believe track records. Our best call in 2020 was shorting the market when S&P 500 was trading at 3150 after realizing the coronavirus pandemic’s significance before most investors. Keeping this in mind let’s take a look at the new hedge fund action regarding Marvell Technology Group Ltd. (NASDAQ:MRVL).
How have hedgies been trading Marvell Technology Group Ltd. (NASDAQ:MRVL)?
At the end of the fourth quarter, a total of 29 of the hedge funds tracked by Insider Monkey were long this stock, a change of -15% from the third quarter of 2019. The graph below displays the number of hedge funds with bullish position in MRVL over the last 18 quarters. With hedge funds’ sentiment swirling, there exists a select group of key hedge fund managers who were increasing their stakes significantly (or already accumulated large positions).
More specifically, Whale Rock Capital Management was the largest shareholder of Marvell Technology Group Ltd. (NASDAQ:MRVL), with a stake worth $111.5 million reported as of the end of September. Trailing Whale Rock Capital Management was Citadel Investment Group, which amassed a stake valued at $82.2 million. Adage Capital Management, Fisher Asset Management, and Woodline Partners 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 Bronson Point Partners allocated the biggest weight to Marvell Technology Group Ltd. (NASDAQ:MRVL), around 3.87% of its 13F portfolio. Crosslink Capital is also relatively very bullish on the stock, designating 3.25 percent of its 13F equity portfolio to MRVL.
Because Marvell Technology Group Ltd. (NASDAQ:MRVL) has witnessed bearish sentiment from the entirety of the hedge funds we track, logic holds that there were a few money managers that elected to cut their positions entirely by the end of the third quarter. Intriguingly, Joel Greenblatt’s Gotham Asset Management dropped the biggest position of all the hedgies followed by Insider Monkey, totaling close to $9.3 million in stock, and Philippe Laffont’s Coatue Management was right behind this move, as the fund sold off about $8.1 million worth. These moves are intriguing to say the least, as aggregate hedge fund interest was cut by 5 funds by the end of the third quarter.
Let’s now review hedge fund activity in other stocks similar to Marvell Technology Group Ltd. (NASDAQ:MRVL). We will take a look at Arthur J. Gallagher & Co. (NYSE:AJG), ArcelorMittal (NYSE:MT), Lennar Corporation (NYSE:LEN), and Wausau Paper Corp. (NYSE:WPP). This group of stocks’ market caps resemble MRVL’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| AJG | 31 | 395355 | 4 |
| MT | 17 | 353286 | 3 |
| LEN | 63 | 1861573 | 4 |
| WPP | 7 | 49982 | 4 |
| Average | 29.5 | 665049 | 3.75 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 29.5 hedge funds with bullish positions and the average amount invested in these stocks was $665 million. That figure was $584 million in MRVL’s case. Lennar Corporation (NYSE:LEN) is the most popular stock in this table. On the other hand Wausau Paper Corp. (NYSE:WPP) is the least popular one with only 7 bullish hedge fund positions. Marvell Technology Group Ltd. (NASDAQ:MRVL) is not the least popular stock in this group but hedge fund interest is still below average. This is a slightly negative signal and we’d rather spend our time researching stocks that hedge funds are piling on. Our calculations showed that top 20 most popular stocks among hedge funds returned 41.3% in 2019 and outperformed the S&P 500 ETF (SPY) by 10.1 percentage points. These stocks lost 22.3% in 2020 through March 16th but beat the market by 3.2 percentage points. Unfortunately MRVL wasn’t nearly as popular as these 20 stocks (hedge fund sentiment was quite bearish); MRVL investors were disappointed as the stock returned -33.2% during the same time period and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 20 most popular stocks among hedge funds as most of these stocks already outperformed the market in Q1.
Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.
Disclosure: None. This article was originally published at Insider Monkey.
