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Hedge Funds Cashing Out Of Maxim Integrated Products Inc. (MXIM)

In this article we will check out the progression of hedge fund sentiment towards Maxim Integrated Products Inc. (NASDAQ:MXIM) and determine whether it is a good investment right now. We at Insider Monkey like to examine what billionaires and hedge funds think of a company before spending days of research on it. Given their 2 and 20 payment structure, hedge funds have more incentives and resources than the average investor. The funds have access to expert networks and get tips from industry insiders. They also employ numerous Ivy League graduates and MBAs. Like everyone else, hedge funds perform miserably at times, but their consensus picks have historically outperformed the market after risk adjustments.

Is Maxim Integrated Products Inc. (NASDAQ:MXIM) a healthy stock for your portfolio? Investors who are in the know are turning less bullish. The number of long hedge fund positions shrunk by 2 lately. Our calculations also showed that MXIM isn’t among the 30 most popular stocks among hedge funds (click for Q1 rankings and see the video for a quick look at the top 5 stocks). MXIM was in 30 hedge funds’ portfolios at the end of the first quarter of 2020. There were 32 hedge funds in our database with MXIM positions at the end of the previous quarter.

Video: Watch our video about the top 5 most popular hedge fund stocks.

Hedge funds’ reputation as shrewd investors has been tarnished in the last decade as their hedged returns couldn’t keep up with the unhedged returns of the market indices. Our research was able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by more than 58 percentage points since March 2017 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that’ll significantly underperform the market. We have been tracking and sharing the list of these stocks since February 2017 and they lost 36% through May 18th. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.

Lee Ainslie MAVERICK CAPITAL

Lee Ainslie of Maverick Capital

At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, 2020’s unprecedented market conditions provide us with the highest number of trading opportunities in a decade. So we are checking out trades like this oneWe interview hedge fund managers and ask them about their best ideas. If you want to find out the best healthcare stock to buy right now, you can watch our latest hedge fund manager interview here. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. Our best call in 2020 was shorting the market when the S&P 500 was trading at 3150 after realizing the coronavirus pandemic’s significance before most investors. With all of this in mind we’re going to take a glance at the new hedge fund action surrounding Maxim Integrated Products Inc. (NASDAQ:MXIM).

Hedge fund activity in Maxim Integrated Products Inc. (NASDAQ:MXIM)

At the end of the first quarter, a total of 30 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -6% from the previous quarter. On the other hand, there were a total of 27 hedge funds with a bullish position in MXIM a year ago. So, let’s review which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

Of the funds tracked by Insider Monkey, Cliff Asness’s AQR Capital Management has the biggest position in Maxim Integrated Products Inc. (NASDAQ:MXIM), worth close to $49.4 million, amounting to 0.1% of its total 13F portfolio. Coming in second is Two Sigma Advisors, led by John Overdeck and David Siegel, holding a $36.7 million position; the fund has 0.1% of its 13F portfolio invested in the stock. Remaining hedge funds and institutional investors that are bullish consist of Alex Sacerdote’s Whale Rock Capital Management, Steve Cohen’s Point72 Asset Management and D. E. Shaw’s D E Shaw. In terms of the portfolio weights assigned to each position Prospector Partners allocated the biggest weight to Maxim Integrated Products Inc. (NASDAQ:MXIM), around 1.71% of its 13F portfolio. Weld Capital Management is also relatively very bullish on the stock, earmarking 0.94 percent of its 13F equity portfolio to MXIM.

Because Maxim Integrated Products Inc. (NASDAQ:MXIM) has witnessed a decline in interest from hedge fund managers, we can see that there is a sect of money managers that decided to sell off their full holdings last quarter. At the top of the heap, Renaissance Technologies sold off the biggest position of the 750 funds monitored by Insider Monkey, totaling close to $63.1 million in stock, and Paul Marshall and Ian Wace’s Marshall Wace LLP was right behind this move, as the fund said goodbye to about $5.6 million worth. These bearish behaviors are important to note, as aggregate hedge fund interest fell by 2 funds last quarter.

Let’s also examine hedge fund activity in other stocks – not necessarily in the same industry as Maxim Integrated Products Inc. (NASDAQ:MXIM) but similarly valued. These stocks are CGI Inc. (NYSE:GIB), Cheniere Energy Partners LP (NYSE:CQP), iQIYI, Inc. (NASDAQ:IQ), and Amcor plc (NYSE:AMCR). This group of stocks’ market valuations are similar to MXIM’s market valuation.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
GIB 18 246597 -1
CQP 3 814865 -4
IQ 28 983179 10
AMCR 19 208401 9
Average 17 563261 3.5

View table here if you experience formatting issues.

As you can see these stocks had an average of 17 hedge funds with bullish positions and the average amount invested in these stocks was $563 million. That figure was $214 million in MXIM’s case. iQIYI, Inc. (NASDAQ:IQ) is the most popular stock in this table. On the other hand Cheniere Energy Partners LP (NYSE:CQP) is the least popular one with only 3 bullish hedge fund positions. Compared to these stocks Maxim Integrated Products Inc. (NASDAQ:MXIM) is more popular among hedge funds. Our calculations showed that top 10 most popular stocks among hedge funds returned 41.4% in 2019 and outperformed the S&P 500 ETF (SPY) by 10.1 percentage points. These stocks gained 8.3% in 2020 through the end of May but still managed to beat the market by 13.2 percentage points. Hedge funds were also right about betting on MXIM, though not to the same extent, as the stock returned 19.6% in Q2 (through the end of May) and outperformed the market as well.

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