How Did Advanced Micro Devices, Inc. (AMD) Perform In Comparison to Hedge Fund Favorites in 2019?

Investing in hedge funds can bring large profits, but it’s not for everybody, since hedge funds are available only for high-net-worth individuals. They generate significant returns for investors to justify their large fees and they allocate a lot of time and employ complex research processes to determine the best stocks to invest in. A particularly interesting group of stocks that hedge funds like is the small-caps. The huge amount of capital does not allow hedge funds to invest a lot in small-caps, but our research showed that their most popular small-cap ideas are less efficiently priced and generate stronger returns than their large- and mega-cap picks and the broader market. That is why we pay special attention to the hedge fund activity in the small-cap space. Nevertheless, it is also possible to find underpriced large-cap stocks by following the hedge funds’ moves. In this article, we look at what those funds think of Advanced Micro Devices, Inc. (NASDAQ:AMD) based on that data.

Advanced Micro Devices, Inc. (NASDAQ:AMD) has experienced an increase in activity from the world’s largest hedge funds lately. AMD was in 56 hedge funds’ portfolios at the end of the third quarter of 2019. There were 41 hedge funds in our database with AMD positions at the end of the previous quarter. Our calculations also showed that AMD isn’t among the 30 most popular stocks among hedge funds (click for Q3 rankings and see the video at the end of this article for Q2 rankings).

To the average investor there are a lot of indicators stock traders put to use to analyze stocks. A couple of the less utilized indicators are hedge fund and insider trading signals. Our experts have shown that, historically, those who follow the best picks of the top investment managers can outclass the broader indices by a significant amount (see the details here).

Steven Cohen of Point72 Asset Management

We leave no stone unturned when looking for the next great investment idea. For example one of the most bullish analysts in America just put his money where his mouth is. He says, “I’m investing more today than I did back in early 2009.” So we check out his pitch. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. This December, we recommended Adams Energy as a one-way bet based on an under-the-radar fund manager’s investor letter and the stock is still extremely cheap despite already gaining 20 percent. Now we’re going to go over the fresh hedge fund action surrounding Advanced Micro Devices, Inc. (NASDAQ:AMD).

How have hedgies been trading Advanced Micro Devices, Inc. (NASDAQ:AMD)?

At Q3’s end, a total of 56 of the hedge funds tracked by Insider Monkey were long this stock, a change of 37% from the second quarter of 2019. The graph below displays the number of hedge funds with bullish position in AMD over the last 17 quarters. With the smart money’s capital changing hands, there exists a select group of key hedge fund managers who were upping their holdings significantly (or already accumulated large positions).

Is AMD A Good Stock To Buy?

The largest stake in Advanced Micro Devices, Inc. (NASDAQ:AMD) was held by Point72 Asset Management, which reported holding $230.2 million worth of stock at the end of September. It was followed by Citadel Investment Group with a $134 million position. Other investors bullish on the company included Polar Capital, Jericho Capital Asset Management, and Alyeska Investment Group. In terms of the portfolio weights assigned to each position Cavalry Asset Management allocated the biggest weight to Advanced Micro Devices, Inc. (NASDAQ:AMD), around 8.91% of its 13F portfolio. Totem Point Management is also relatively very bullish on the stock, earmarking 6.79 percent of its 13F equity portfolio to AMD.

As industrywide interest jumped, key hedge funds have jumped into Advanced Micro Devices, Inc. (NASDAQ:AMD) headfirst. Jericho Capital Asset Management, managed by Josh Resnick, assembled the biggest position in Advanced Micro Devices, Inc. (NASDAQ:AMD). Jericho Capital Asset Management had $71.7 million invested in the company at the end of the quarter. Anand Parekh’s Alyeska Investment Group also made a $52.7 million investment in the stock during the quarter. The following funds were also among the new AMD investors: Kevin Cottrell and Chris LaSusa’s KCL Capital, Brandon Haley’s Holocene Advisors, and Matthew Knauer and Mina Faltas’s Nokota Management.

Let’s now review hedge fund activity in other stocks – not necessarily in the same industry as Advanced Micro Devices, Inc. (NASDAQ:AMD) but similarly valued. These stocks are Twitter Inc (NYSE:TWTR), Barclays PLC (NYSE:BCS), Canadian Natural Resources Limited (NYSE:CNQ), and Monster Beverage Corp (NASDAQ:MNST). This group of stocks’ market caps match AMD’s market cap.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
TWTR 50 2252822 3
BCS 15 131768 3
CNQ 32 558227 8
MNST 34 2641322 -4
Average 32.75 1396035 2.5

View table here if you experience formatting issues.

As you can see these stocks had an average of 32.75 hedge funds with bullish positions and the average amount invested in these stocks was $1396 million. That figure was $1135 million in AMD’s case. Twitter Inc (NYSE:TWTR) is the most popular stock in this table. On the other hand Barclays PLC (NYSE:BCS) is the least popular one with only 15 bullish hedge fund positions. Compared to these stocks Advanced Micro Devices, Inc. (NASDAQ:AMD) is more popular among hedge funds. Our calculations showed that top 20 most popular stocks among hedge funds returned 41.1% in 2019 through December 23rd and outperformed the S&P 500 ETF (SPY) by 10.1 percentage points. Hedge funds were also right about betting on AMD as the stock returned 146.3% so far in 2019 (through 12/23) 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.
5 Most Popular Stocks Among Hedge Funds
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.