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Is Integrated Device Technology, Inc. (IDTI) A Good Stock To Buy?

At Insider Monkey, we pore over the filings of more than 700 top investment firms every quarter, a process we have now completed for the latest reporting period. The data we’ve gathered as a result gives us access to a wealth of collective knowledge based on these firms’ portfolio holdings as of September 30. In this article, we will use that wealth of knowledge to determine whether or not Integrated Device Technology, Inc. (NASDAQ:IDTI) makes for a good investment right now.

Integrated Device Technology, Inc. (NASDAQ:IDTI) investors should pay attention to an increase in activity from the world’s largest hedge funds recently. IDTI was in 35 hedge funds’ portfolios at the end of the third quarter of 2018. There were 16 hedge funds in our database with IDTI holdings at the end of the previous quarter. Our calculations also showed that IDTI isn’t among the 30 most popular stocks among hedge funds.

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 18 percentage points since May 2014 through December 3, 2018 (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.

Ken Griffin

Let’s take a gander at the latest hedge fund action regarding Integrated Device Technology, Inc. (NASDAQ:IDTI).

What does the smart money think about Integrated Device Technology, Inc. (NASDAQ:IDTI)?

At the end of the third quarter, a total of 35 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 119% from one quarter earlier. By comparison, 16 hedge funds held shares or bullish call options in IDTI heading into this year. So, let’s find out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

No of Hedge Funds with IDTI Positions

Among these funds, Magnetar Capital held the most valuable stake in Integrated Device Technology, Inc. (NASDAQ:IDTI), which was worth $238 million at the end of the third quarter. On the second spot was Pentwater Capital Management which amassed $143.4 million worth of shares. Moreover, Alpine Associates, TIG Advisors, and Citadel Investment Group were also bullish on Integrated Device Technology, Inc. (NASDAQ:IDTI), allocating a large percentage of their portfolios to this stock.

With a general bullishness amongst the heavyweights, some big names have jumped into Integrated Device Technology, Inc. (NASDAQ:IDTI) headfirst. Magnetar Capital, managed by Alec Litowitz and Ross Laser, assembled the most valuable position in Integrated Device Technology, Inc. (NASDAQ:IDTI). Magnetar Capital had $238 million invested in the company at the end of the quarter. Matthew Halbower’s Pentwater Capital Management also initiated a $143.4 million position during the quarter. The following funds were also among the new IDTI investors: Robert Emil Zoellner’s Alpine Associates, Carl Tiedemann and Michael Tiedemann’s TIG Advisors, and D. E. Shaw’s D E Shaw.

Let’s go over hedge fund activity in other stocks – not necessarily in the same industry as Integrated Device Technology, Inc. (NASDAQ:IDTI) but similarly valued. These stocks are JetBlue Airways Corporation (NASDAQ:JBLU), New Residential Investment Corp (NYSE:NRZ), USG Corporation (NYSE:USG), and Curtiss-Wright Corp. (NYSE:CW). This group of stocks’ market caps resemble IDTI’s market cap.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
JBLU 30 560163 3
NRZ 16 115070 -3
USG 21 2111110 0
CW 22 362531 1
Average 22.25 787219 0.25

View table here if you experience formatting issues.

As you can see these stocks had an average of 22.25 hedge funds with bullish positions and the average amount invested in these stocks was $787 million. That figure was $838 million in IDTI’s case. JetBlue Airways Corporation (NASDAQ:JBLU) is the most popular stock in this table. On the other hand New Residential Investment Corp (NYSE:NRZ) is the least popular one with only 16 bullish hedge fund positions. Compared to these stocks Integrated Device Technology, Inc. (NASDAQ:IDTI) is more popular among hedge funds. Considering that hedge funds are fond of this stock in relation to its market cap peers, it may be a good idea to analyze it in detail and potentially include it in your portfolio.

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

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