After several tireless days we have finished crunching the numbers from the more than 700 13F filings issued by the elite hedge funds and other investment firms that we track at Insider Monkey, which disclosed those firms’ equity portfolios as of September 30. The results of that effort will be put on display in this article, as we share valuable insight into the smart money sentiment towards Semtech Corporation (NASDAQ:SMTC).
Semtech Corporation is trading at 24.4 times forward earnings and it has registered a decrease in activity from the world’s largest hedge funds of late. There were 15 hedge funds in our database with SMTC holdings at the end of the previous quarter. The level and the change in hedge fund popularity aren’t the only variables you need to analyze to decipher hedge funds’ perspectives. A stock may witness a boost in popularity, but it may still be less popular than similarly priced stocks. That’s why at the end of this article we will examine companies such as II-VI, Inc. (NASDAQ:IIVI), BancFirst Corporation (NASDAQ:BANF), and Archrock Partners LP (NASDAQ:APLP) to gather more data points.
In the eyes of most market participants, hedge funds are viewed as unimportant, outdated investment vehicles of years past. While there are greater than 8000 funds with their doors open today, Our researchers choose to focus on the crème de la crème of this club, approximately 700 funds. It is estimated that this group of investors shepherd bulk of all hedge funds’ total capital, and by paying attention to their matchless stock picks, Insider Monkey has brought to light a few investment strategies that have historically exceeded the broader indices. Insider Monkey’s small-cap hedge fund strategy outrun the S&P 500 index by 12 percentage points a year for a decade in their back tests.
Keeping this in mind, let’s take a glance at the fresh action regarding Semtech Corporation (NASDAQ:SMTC).
How have hedgies been trading Semtech Corporation (NASDAQ:SMTC)?
Heading into Q4, a total of 13 of the hedge funds tracked by Insider Monkey were long this stock, a decline of 13% from one quarter earlier. With the smart money’s sentiment swirling, there exists an “upper tier” of notable hedge fund managers who were boosting their holdings meaningfully (or already accumulated large positions).
When looking at the institutional investors followed by Insider Monkey, Gordy Holterman and Derek Dunn’s Overland Advisors has the largest position in Semtech Corporation (NASDAQ:SMTC), worth close to $14.4 million, corresponding to 0.4% of its total 13F portfolio. The second largest stake is held by Ken Griffin’s Citadel Investment Group, with a $14.3 million position; less than 0.1%% of its 13F portfolio is allocated to the company. Remaining peers with similar optimism contain Lee Munder’s Lee Munder Capital Group and Dmitry Balyasny’s Balyasny Asset Management.
Seeing as Semtech Corporation (NASDAQ:SMTC) has experienced a declining sentiment from the entirety of the hedge funds we track, we can see that there was a specific group of fund managers who sold off their entire stakes in the third quarter. It’s worth mentioning that Ken Hahn’s Quentec Asset Management dumped the biggest position of the 700 funds followed by Insider Monkey, valued at close to $4.9 million in stock. Phill Gross and Robert Atchinson’s fund, Adage Capital Management, also cut its stock, about $4 million worth. These moves are intriguing to say the least, as total hedge fund interest fell by 2 funds in the third quarter.
Let’s check out hedge fund activity in other stocks – not necessarily in the same industry as Semtech Corporation (NASDAQ:SMTC) but similarly valued. We will take a look at II-VI, Inc. (NASDAQ:IIVI), BancFirst Corporation (NASDAQ:BANF), Archrock Partners LP (NASDAQ:APLP), and Otter Tail Corporation (NASDAQ:OTTR). This group of stocks’ market valuations resemble SMTC’s market valuation.
|Ticker||No of HFs with positions||Total Value of HF Positions (x1000)||Change in HF Position|
As you can see these stocks had an average of 10 hedge funds with bullish positions and the average amount invested in these stocks was $36 million. That figure was $64 million in SMTC’s case. II-VI, Inc. (NASDAQ:IIVI) is the most popular stock in this table. On the other hand BancFirst Corporation (NASDAQ:BANF) is the least popular one with only 5 bullish hedge fund positions. Semtech Corporation (NASDAQ:SMTC) is not the most popular stock in this group, but hedge fund interest is still above average. This is a slightly positive signal, but we’d rather spend our time researching stocks that hedge funds are piling on. In this regard IIVI might be a better candidate to consider a long position.