In this article you are going to find out whether hedge funds think Monolithic Power Systems, Inc. (NASDAQ:MPWR) 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 MPWR a good stock to buy? Monolithic Power Systems, Inc. (NASDAQ:MPWR) was in 37 hedge funds’ portfolios at the end of September. The all time high for this statistic is 36. This means the bullish number of hedge fund positions in this stock currently sits at its all time high. MPWR has experienced an increase in hedge fund interest in recent months. There were 36 hedge funds in our database with MPWR holdings at the end of June. Our calculations also showed that MPWR isn’t among the 30 most popular stocks among hedge funds (click for Q3 rankings and see the video for a quick look at the top 5 stocks).
Video: Watch our video about the top 5 most popular hedge fund stocks.
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 was able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by more than 66 percentage points since March 2017 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that’ll significantly underperform the market. We have been tracking and sharing the list of these stocks since February 2017 and they lost 13% through November 17th. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, the House passed a landmark bill decriminalizing marijuana. So, we are checking out this under the radar cannabis stock right now. We go through lists like the 15 best blue chip stocks to buy to pick the best large-cap stocks to buy. 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 website. With all of this in mind we’re going to analyze the latest hedge fund action surrounding Monolithic Power Systems, Inc. (NASDAQ:MPWR).
Do Hedge Funds Think MPWR Is A Good Stock To Buy Now?
At third quarter’s end, a total of 37 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 3% from the previous quarter. On the other hand, there were a total of 26 hedge funds with a bullish position in MPWR a year ago. With the smart money’s sentiment swirling, there exists a select group of noteworthy hedge fund managers who were boosting their holdings considerably (or already accumulated large positions).
Among these funds, Whale Rock Capital Management held the most valuable stake in Monolithic Power Systems, Inc. (NASDAQ:MPWR), which was worth $229.6 million at the end of the third quarter. On the second spot was GQG Partners which amassed $226.1 million worth of shares. Renaissance Technologies, Millennium Management, and Impax Asset Management 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 Navellier & Associates allocated the biggest weight to Monolithic Power Systems, Inc. (NASDAQ:MPWR), around 1.65% of its 13F portfolio. Osterweis Capital Management is also relatively very bullish on the stock, earmarking 1.54 percent of its 13F equity portfolio to MPWR.
As industrywide interest jumped, some big names have been driving this bullishness. Impax Asset Management, managed by Ian Simm, assembled the biggest position in Monolithic Power Systems, Inc. (NASDAQ:MPWR). Impax Asset Management had $36.3 million invested in the company at the end of the quarter. Panayotis Takis Sparaggis’s Alkeon Capital Management also initiated a $8.4 million position during the quarter. The other funds with new positions in the stock are Paul Tudor Jones’s Tudor Investment Corp, Ray Dalio’s Bridgewater Associates, and Ryan Tolkin (CIO)’s Schonfeld Strategic Advisors.
Let’s check out hedge fund activity in other stocks – not necessarily in the same industry as Monolithic Power Systems, Inc. (NASDAQ:MPWR) but similarly valued. These stocks are Cloudflare, Inc. (NYSE:NET), Cincinnati Financial Corporation (NASDAQ:CINF), KB Financial Group, Inc. (NYSE:KB), Boston Properties, Inc. (NYSE:BXP), ABIOMED, Inc. (NASDAQ:ABMD), Liberty Global plc (NASDAQ:LBTYA), and VICI Properties Inc. (NYSE:VICI). This group of stocks’ market values match MPWR’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 27.9 hedge funds with bullish positions and the average amount invested in these stocks was $724 million. That figure was $754 million in MPWR’s case. Cloudflare, Inc. (NYSE:NET) is the most popular stock in this table. On the other hand KB Financial Group, Inc. (NYSE:KB) is the least popular one with only 6 bullish hedge fund positions. Monolithic Power Systems, Inc. (NASDAQ:MPWR) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for MPWR is 76.8. 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 20 most popular stocks among hedge funds returned 41.3% in 2019 and outperformed the S&P 500 ETF (SPY) by 10 percentage points. These stocks gained 33.3% in 2020 through December 18th and still beat the market by 16.4 percentage points. Hedge funds were also right about betting on MPWR as the stock returned 24.5% since the end of Q3 (through 12/18) and outperformed the market. Hedge funds were rewarded for their relative bullishness.
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Disclosure: None. This article was originally published at Insider Monkey.