Coronavirus is probably the #1 concern in investors’ minds right now. It should be. We estimate that COVID-19 will kill around 5 million people worldwide and there is a 3.3% probability that Donald Trump will die from the new coronavirus (read the details.). In these volatile markets we scrutinize hedge fund filings to get a reading on which direction each stock might be going. The financial regulations require hedge funds and wealthy investors that exceeded the $100 million equity holdings threshold to file a report that shows their positions at the end of every quarter. Even though it isn’t the intention, these filings to a certain extent level the playing field for ordinary investors. The latest round of 13F filings disclosed the funds’ positions on December 31st. We at Insider Monkey have made an extensive database of more than 835 of those established hedge funds and famous value investors’ filings. In this article, we analyze how these elite funds and prominent investors traded Micron Technology, Inc. (NASDAQ:MU) based on those filings.
Micron Technology, Inc. (NASDAQ:MU) investors should be aware of an increase in activity from the world’s largest hedge funds of late. MU was in 89 hedge funds’ portfolios at the end of the fourth quarter of 2019. There were 72 hedge funds in our database with MU positions at the end of the previous quarter. Our calculations also showed that MU currently ranks 24th among the 30 most popular stocks among hedge funds (click for Q4 rankings and see the video below for Q3 rankings).
Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.
To most investors, hedge funds are assumed to be slow, old investment vehicles of years past. While there are greater than 8000 funds trading at the moment, Our researchers hone in on the crème de la crème of this club, around 850 funds. Most estimates calculate that this group of people preside over the lion’s share of the hedge fund industry’s total capital, and by monitoring their highest performing investments, Insider Monkey has unearthed several investment strategies that have historically exceeded the market. Insider Monkey’s flagship short hedge fund strategy beat the S&P 500 short ETFs by around 20 percentage points a year since its inception in March 2017. Our portfolio of short stocks lost 35.3% since February 2017 (through March 3rd) even though the market was up more than 35% during the same period. We just shared a list of 7 short targets in our latest quarterly update .
David Tepper of Appaloosa Management LP
We leave no stone unturned when looking for the next great investment idea. For example Europe is set to become the world’s largest cannabis market, so we check out this European marijuana stock pitch. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences, and and go through short-term trade recommendations like this one. We even check out the recommendations of services with hard to believe track records. In January, we recommended a long position in one of the most shorted stocks in the market, and that stock returned nearly 50% despite the large losses in the market since our recommendation. With all of this in mind let’s check out the recent hedge fund action regarding Micron Technology, Inc. (NASDAQ:MU).
What have hedge funds been doing with Micron Technology, Inc. (NASDAQ:MU)?
At Q4’s end, a total of 89 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 24% from one quarter earlier. The graph below displays the number of hedge funds with bullish position in MU over the last 18 quarters. So, let’s check out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
Among these funds, AQR Capital Management held the most valuable stake in Micron Technology, Inc. (NASDAQ:MU), which was worth $487.3 million at the end of the third quarter. On the second spot was Appaloosa Management LP which amassed $435.6 million worth of shares. Arrowstreet Capital, Citadel Investment Group, and D E Shaw 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 Mohnish Pabrai allocated the biggest weight to Micron Technology, Inc. (NASDAQ:MU), around 36.25% of its 13F portfolio. Kadensa Capital is also relatively very bullish on the stock, designating 17.56 percent of its 13F equity portfolio to MU.
Consequently, key money managers have jumped into Micron Technology, Inc. (NASDAQ:MU) headfirst. Woodline Partners, managed by Michael Rockefeller and Karl Kroeker, created the most valuable position in Micron Technology, Inc. (NASDAQ:MU). Woodline Partners had $52.5 million invested in the company at the end of the quarter. John Overdeck and David Siegel’s Two Sigma Advisors also made a $36.9 million investment in the stock during the quarter. The other funds with brand new MU positions are Ken Heebner’s Capital Growth Management, Doug Silverman and Alexander Klabin’s Senator Investment Group, and Leung Chi Kit’s Kadensa Capital.
Let’s now take a look at hedge fund activity in other stocks – not necessarily in the same industry as Micron Technology, Inc. (NASDAQ:MU) but similarly valued. We will take a look at Westpac Banking Corporation (NYSE:WBK), Crown Castle International Corp. (REIT) (NYSE:CCI), Colgate-Palmolive Company (NYSE:CL), and Northrop Grumman Corporation (NYSE:NOC). All of these stocks’ market caps are closest to MU’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| WBK | 7 | 49339 | 3 |
| CCI | 38 | 1723851 | -3 |
| CL | 52 | 2086840 | 7 |
| NOC | 44 | 1320442 | -2 |
| Average | 35.25 | 1295118 | 1.25 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 35.25 hedge funds with bullish positions and the average amount invested in these stocks was $1295 million. That figure was $4566 million in MU’s case. Colgate-Palmolive Company (NYSE:CL) is the most popular stock in this table. On the other hand Westpac Banking Corporation (NYSE:WBK) is the least popular one with only 7 bullish hedge fund positions. Compared to these stocks Micron Technology, Inc. (NASDAQ:MU) is more popular among hedge funds. 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 also gained 0.1% in 2020 through March 2nd and beat the market by 4.1 percentage points. Hedge funds were also right about betting on MU as the stock returned 1.5% so far in Q1 (through March 2nd) and outperformed the market by an even larger margin. Hedge funds were clearly right about piling into this stock relative to other stocks with similar market capitalizations.
Disclosure: None. This article was originally published at Insider Monkey.
