Is Maxim Integrated Products Inc. (MXIM) A Good Stock To Buy Right Now?

Is Maxim Integrated Products Inc. (NASDAQ:MXIM) a good stock to buy right now? We at Insider Monkey like to examine what billionaires and hedge funds think of a company before doing days of research on it. Given their 2 and 20 payment structure, hedge funds have more resources than the average investor. The funds have access to expert networks and get tips from industry insiders. They also have numerous Ivy League graduates and MBAs. Like everyone else, hedge funds perform miserably at times, but their consensus picks have historically outperformed the market after risk adjustments. More recently the top 30 mid-cap stocks (market caps between $1 billion and $10 billion) among hedge funds delivered an average return of 18% during the last four quarters (S&P 500 Index funds returned only 7.6% during the same period).

Hedge fund interest in Maxim Integrated Products Inc. (NASDAQ:MXIM) shares was flat at the end of last quarter. This is usually a negative indicator. The level and the change in hedge fund popularity aren’t the only variables you need to analyze to decipher hedge funds’ perspectives. A stock may witness a boost in popularity but it may still be less popular than similarly priced stocks. That’s why at the end of this article we will examine companies such as Cheniere Energy Partners LP (NYSEAMEX:CQP), Mobileye NV (NYSE:MBLY), and International Flavors & Fragrances Inc (NYSE:IFF) to gather more data points.

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Keeping this in mind, let’s go over the latest action encompassing Maxim Integrated Products Inc. (NASDAQ:MXIM).

What does the smart money think about Maxim Integrated Products Inc. (NASDAQ:MXIM)?

At the end of the third quarter, a total of 26 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 0% from the second quarter of 2016. With the smart money’s sentiment swirling, there exists an “upper tier” of noteworthy hedge fund managers who were increasing their stakes significantly (or already accumulated large positions).

HedgeFundSentimentChart

According to Insider Monkey’s hedge fund database, Millennium Management, managed by Israel Englander, holds the biggest position in Maxim Integrated Products Inc. (NASDAQ:MXIM). Millennium Management has a $159.5 million position in the stock, comprising 0.3% of its 13F portfolio. Coming in second is AQR Capital Management, managed by Cliff Asness, which holds a $112.3 million position; 0.2% of its 13F portfolio is allocated to the stock. Some other hedge funds and institutional investors with similar optimism consist of John Overdeck and David Siegel’s Two Sigma Advisors, Jim Simons’s Renaissance Technologies and D. E. Shaw’s D E Shaw. Unfortunately these are all quant hedge funds and none of them are among our list of the 100 best performing hedge funds.

Because Maxim Integrated Products Inc. (NASDAQ:MXIM) has faced declining sentiment from hedge fund managers, we can see that there were a few hedgies that decided to sell off their entire stakes by the end of the third quarter. At the top of the heap, billionaire Steve Cohen’s Point72 Asset Management said goodbye to the biggest investment of the 700 funds tracked by Insider Monkey, worth about $49.9 million in stock, and Jacob Gottlieb’s Visium Asset Management was right behind this move, as the fund sold out about $3.5 million worth of stock.

Let’s check out hedge fund activity in other stocks similar to Maxim Integrated Products Inc. (NASDAQ:MXIM). These stocks are Cheniere Energy Partners LP (NYSEAMEX:CQP), Mobileye NV (NYSE:MBLY), International Flavors & Fragrances Inc (NYSE:IFF), and First Data Corp (NYSE:FDC). This group of stocks’ market valuations are similar to MXIM’s market valuation.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
CQP 5 33390 -1
MBLY 30 465006 5
IFF 16 269994 -4
FDC 38 661363 3

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 $357 million. That figure was $533 million in MXIM’s case. First Data Corp (NYSE:FDC) is the most popular stock in this table. On the other hand Cheniere Energy Partners LP (NYSEAMEX:CQP) is the least popular one with only 5 bullish hedge fund positions. Maxim Integrated Products Inc. (NASDAQ:MXIM) is not the most popular stock in this group but hedge fund interest is still above average. This is a slightly positive signal but we’d rather spend our time researching stocks that hedge funds are piling on. In this regard FDC might be a better candidate to consider a long position.