In this article you are going to find out whether hedge funds think Applied Materials, Inc. (NASDAQ:AMAT) is a good investment right now. We like to check what the smart money thinks first before doing extensive research on a given stock. Although there have been several high profile failed hedge fund picks, the consensus picks among hedge fund investors have historically outperformed the market after adjusting for known risk attributes. It’s not surprising given that hedge funds have access to better information and more resources to predict the winners in the stock market.
Is AMAT stock a buy or sell? Money managers were taking an optimistic view. The number of bullish hedge fund positions improved by 2 recently. Applied Materials, Inc. (NASDAQ:AMAT) was in 61 hedge funds’ portfolios at the end of December. The all time high for this statistic is 72. Our calculations also showed that AMAT isn’t among the 30 most popular stocks among hedge funds (click for Q4 rankings). There were 59 hedge funds in our database with AMAT holdings at the end of September.
At Insider Monkey we leave no stone unturned when looking for the next great investment idea. Recently Oregon became the first state to legalize psychedelic mushrooms which are shown to have promising results in treating depression, addiction, and PTSD in early stage academic studies. So, we are checking out this psychedelic drug stock idea right now. We go through lists like the 10 best biotech stocks to invest in to pick the next stock that will deliver a 10x return. Even though we recommend positions in only a tiny fraction of the companies we analyze, we check out as many stocks as we can. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. You can subscribe to our free daily newsletter on our homepage (or at the end of this article). Now let’s review the key hedge fund action surrounding Applied Materials, Inc. (NASDAQ:AMAT).
Do Hedge Funds Think AMAT Is A Good Stock To Buy Now?
At the end of December, a total of 61 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 3% from the previous quarter. On the other hand, there were a total of 72 hedge funds with a bullish position in AMAT a year ago. So, let’s examine which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
According to Insider Monkey’s hedge fund database, Generation Investment Management, managed by David Blood and Al Gore, holds the biggest position in Applied Materials, Inc. (NASDAQ:AMAT). Generation Investment Management has a $452 million position in the stock, comprising 2% of its 13F portfolio. Sitting at the No. 2 spot is Cantillon Capital Management, managed by William von Mueffling, which holds a $335.7 million position; 2.5% of its 13F portfolio is allocated to the company. Remaining members of the smart money that hold long positions contain Ken Griffin’s Citadel Investment Group, Lee Ainslie’s Maverick Capital and David Goel and Paul Ferri’s Matrix Capital Management. In terms of the portfolio weights assigned to each position Abrams Bison Investments allocated the biggest weight to Applied Materials, Inc. (NASDAQ:AMAT), around 7.68% of its 13F portfolio. Lansdowne Partners is also relatively very bullish on the stock, designating 7.41 percent of its 13F equity portfolio to AMAT.
Consequently, some big names were breaking ground themselves. Polar Capital, managed by Brian Ashford-Russell and Tim Woolley, assembled the largest position in Applied Materials, Inc. (NASDAQ:AMAT). Polar Capital had $173.8 million invested in the company at the end of the quarter. Renaissance Technologies also made a $105.4 million investment in the stock during the quarter. The other funds with brand new AMAT positions are Suraj Parkash Chopra’s Force Hill Capital Management, Ben Gordon’s Blue Grotto Capital, and David Costen Haley’s HBK Investments.
Let’s now take a look at hedge fund activity in other stocks similar to Applied Materials, Inc. (NASDAQ:AMAT). These stocks are Zoetis Inc (NYSE:ZTS), Canadian National Railway Company (NYSE:CNI), Altria Group Inc (NYSE:MO), Fiserv, Inc. (NASDAQ:FISV), NIO Inc. (NYSE:NIO), Automatic Data Processing (NASDAQ:ADP), and Cigna Corporation (NYSE:CI). This group of stocks’ market values are similar to AMAT’s market value.
|Ticker||No of HFs with positions||Total Value of HF Positions (x1000)||Change in HF Position|
View table here if you experience formatting issues.
As you can see these stocks had an average of 51.7 hedge funds with bullish positions and the average amount invested in these stocks was $2731 million. That figure was $3632 million in AMAT’s case. Fiserv, Inc. (NASDAQ:FISV) is the most popular stock in this table. On the other hand Canadian National Railway Company (NYSE:CNI) is the least popular one with only 31 bullish hedge fund positions. Applied Materials, Inc. (NASDAQ:AMAT) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for AMAT is 56.2. Stocks with higher number of hedge fund positions relative to other stocks as well as relative to their historical range receive a higher sentiment score. Our calculations showed that top 30 most popular stocks among hedge funds returned 81.2% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 26 percentage points. These stocks gained 5.3% in 2021 through March 19th and still beat the market by 0.8 percentage points. Hedge funds were also right about betting on AMAT as the stock returned 33.3% since the end of Q4 (through 3/19) and outperformed the market. Hedge funds were rewarded for their relative bullishness.
Follow Applied Materials Inc (NASDAQ:AMAT)
Follow Applied Materials Inc (NASDAQ:AMAT)
Disclosure: None. This article was originally published at Insider Monkey.