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Hedge Funds Have Never Been This Bullish On Lattice Semiconductor Corporation (LSCC)

Like everyone else, elite investors make mistakes. Some of their top consensus picks, such as Amazon, Facebook and Alibaba, have not done well in Q4 due to various reasons. Nevertheless, the data show elite investors’ consensus picks have done well on average over the long-term. The top 15 S&P 500 stocks among hedge funds at the end of September 2018 returned an average of 1% through March 15th whereas the S&P 500 Index ETF lost 2.2% during the same period. Because their consensus picks have done well, we pay attention to what elite funds think before doing extensive research on a stock. In this article, we take a closer look at Lattice Semiconductor Corporation (NASDAQ:LSCC) from the perspective of those elite funds.

Is Lattice Semiconductor Corporation (NASDAQ:LSCC) a worthy investment right now? Money managers are becoming hopeful. The number of bullish hedge fund positions advanced by 4 recently. Our calculations also showed that lscc isn’t among the 30 most popular stocks among hedge funds. LSCC was in 22 hedge funds’ portfolios at the end of December. There were 18 hedge funds in our database with LSCC positions at the end of the previous quarter.

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 has shown that hedge funds’ small-cap stock picks managed to beat the market by double digits annually between 1999 and 2016, but the margin of outperformance has been declining in recent years. Nevertheless, we were still able to identify in advance a select group of hedge fund holdings that outperformed the market by 32 percentage points since May 2014 through March 12, 2019 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that underperformed the market by 10 percentage points annually between 2006 and 2017. Interestingly the margin of underperformance of these stocks has been increasing in recent years. Investors who are long the market and short these stocks would have returned more than 27% annually between 2015 and 2017. We have been tracking and sharing the list of these stocks since February 2017 in our quarterly newsletter.

Didric Cederholm Lion Point Capital

Didric Cederholm of Lion Point Capital

We’re going to go over the latest hedge fund action surrounding Lattice Semiconductor Corporation (NASDAQ:LSCC).

What have hedge funds been doing with Lattice Semiconductor Corporation (NASDAQ:LSCC)?

Heading into the first quarter of 2019, a total of 22 of the hedge funds tracked by Insider Monkey were long this stock, a change of 22% from the previous quarter. Below, you can check out the change in hedge fund sentiment towards LSCC over the last 14 quarters. With hedge funds’ capital changing hands, there exists a few notable hedge fund managers who were increasing their holdings significantly (or already accumulated large positions).

No of Hedge Funds with LSCC Positions

When looking at the institutional investors followed by Insider Monkey, Didric Cederholm’s Lion Point has the most valuable position in Lattice Semiconductor Corporation (NASDAQ:LSCC), worth close to $61.3 million, accounting for 9.6% of its total 13F portfolio. Sitting at the No. 2 spot is Amy Minella of Cardinal Capital, with a $22.7 million position; the fund has 0.8% of its 13F portfolio invested in the stock. Some other members of the smart money that are bullish contain Alex Duran and Scott Hendrickson’s Permian Investment Partners, Joe Milano’s Greenhouse Funds and Mark Kingdon’s Kingdon Capital.

As aggregate interest increased, key hedge funds were breaking ground themselves. Permian Investment Partners, managed by Alex Duran and Scott Hendrickson, assembled the largest position in Lattice Semiconductor Corporation (NASDAQ:LSCC). Permian Investment Partners had $16.3 million invested in the company at the end of the quarter. David Brown’s Hawk Ridge Management also initiated a $3.3 million position during the quarter. The other funds with brand new LSCC positions are Kevin Cottrell and Chris LaSusa’s KCL Capital, Paul Marshall and Ian Wace’s Marshall Wace LLP, and Mike Vranos’s Ellington.

Let’s now take a look at hedge fund activity in other stocks similar to Lattice Semiconductor Corporation (NASDAQ:LSCC). We will take a look at Genesco Inc. (NYSE:GCO), Boston Private Financial Holdings, Inc. (NASDAQ:BPFH), Xperi Corporation (NASDAQ:XPER), and Systemax Inc. (NYSE:SYX). This group of stocks’ market caps are similar to LSCC’s market cap.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
GCO 22 97395 3
BPFH 13 51565 4
XPER 15 108258 -1
SYX 11 26036 -3
Average 15.25 70814 0.75

View table here if you experience formatting issues.

As you can see these stocks had an average of 15.25 hedge funds with bullish positions and the average amount invested in these stocks was $71 million. That figure was $139 million in LSCC’s case. Genesco Inc. (NYSE:GCO) is the most popular stock in this table. On the other hand Systemax Inc. (NYSE:SYX) is the least popular one with only 11 bullish hedge fund positions. Lattice Semiconductor Corporation (NASDAQ:LSCC) is not the most popular stock in this group but hedge fund interest is still above average. Our calculations showed that top 15 most popular stocks) among hedge funds returned 24.2% through April 22nd and outperformed the S&P 500 ETF (SPY) by more than 7 percentage points. Hedge funds were also right about betting on LSCC as the stock returned 87.3% and outperformed the market by an even larger margin. Hedge funds were rewarded for their relative bullishness.

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

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