With the fourth-quarter round of 13F filings behind us it is time to take a look at the stocks in which some of the best money managers in the world preferred to invest or sell heading into the first quarter of 2021. One of these stocks was Marvell Technology Group Ltd. (NASDAQ:MRVL).
Is MRVL stock a buy or sell? The smart money was taking a bullish view. The number of long hedge fund bets inched up by 3 lately. Marvell Technology Group Ltd. (NASDAQ:MRVL) was in 40 hedge funds’ portfolios at the end of the fourth quarter of 2020. The all time high for this statistic is 50. Our calculations also showed that MRVL isn’t among the 30 most popular stocks among hedge funds (click for Q4 rankings). There were 37 hedge funds in our database with MRVL holdings at the end of September.
So, why do we pay attention to hedge fund sentiment before making any investment decisions? 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 S&P 500 ETFs by more than 124 percentage points since March 2017 (see the details here).
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 10 best battery stocks to buy to identify the next stock with 10x upside potential. 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 view the recent hedge fund action encompassing Marvell Technology Group Ltd. (NASDAQ:MRVL).
Do Hedge Funds Think MRVL Is A Good Stock To Buy Now?
At the end of December, a total of 40 of the hedge funds tracked by Insider Monkey were long this stock, a change of 8% from the previous quarter. The graph below displays the number of hedge funds with bullish position in MRVL over the last 22 quarters. So, let’s find out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
Of the funds tracked by Insider Monkey, Brandon Haley’s Holocene Advisors has the largest position in Marvell Technology Group Ltd. (NASDAQ:MRVL), worth close to $125.6 million, comprising 0.8% of its total 13F portfolio. The second largest stake is held by Citadel Investment Group, led by Ken Griffin, holding a $86 million position; less than 0.1%% of its 13F portfolio is allocated to the stock. Other members of the smart money with similar optimism include Phill Gross and Robert Atchinson’s Adage Capital Management, Matthew Hulsizer’s PEAK6 Capital Management and Seymour Sy Kaufman and Michael Stark’s Crosslink Capital. In terms of the portfolio weights assigned to each position Totem Point Management allocated the biggest weight to Marvell Technology Group Ltd. (NASDAQ:MRVL), around 9.81% of its 13F portfolio. Glaxis Capital Management is also relatively very bullish on the stock, dishing out 3.98 percent of its 13F equity portfolio to MRVL.
Consequently, specific money managers were breaking ground themselves. Woodline Partners, managed by Michael Rockefeller and Karl Kroeker, assembled the most valuable position in Marvell Technology Group Ltd. (NASDAQ:MRVL). Woodline Partners had $24.5 million invested in the company at the end of the quarter. Carl Tiedemann and Michael Tiedemann’s TIG Advisors also made a $20.3 million investment in the stock during the quarter. The other funds with new positions in the stock are Joe DiMenna’s ZWEIG DIMENNA PARTNERS, Javier Velazquez’s Albar Capital, and Mikal Patel’s Oribel Capital Management.
Let’s now take a look at hedge fund activity in other stocks similar to Marvell Technology Group Ltd. (NASDAQ:MRVL). These stocks are HP Inc. (NYSE:HPQ), The Hershey Company (NYSE:HSY), Orange SA (NYSE:ORAN), New Oriental Education & Technology Group Inc. (NYSE:EDU), Seagen Inc. (NASDAQ:SGEN), SBA Communications Corporation (NASDAQ:SBAC), and Royalty Pharma Plc (NASDAQ:RPRX). This group of stocks’ market valuations resemble MRVL’s market valuation.
|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 31 hedge funds with bullish positions and the average amount invested in these stocks was $2682 million. That figure was $556 million in MRVL’s case. New Oriental Education & Technology Group Inc. (NYSE:EDU) is the most popular stock in this table. On the other hand Orange SA (NYSE:ORAN) is the least popular one with only 3 bullish hedge fund positions. Marvell Technology Group Ltd. (NASDAQ:MRVL) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for MRVL is 78.3. 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. This is a slightly positive signal but we’d rather spend our time researching stocks that hedge funds are piling on. 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 beat the market again by 0.8 percentage points. Unfortunately MRVL wasn’t nearly as popular as these 30 stocks and hedge funds that were betting on MRVL were disappointed as the stock returned -1.1% since the end of December (through 3/19) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 30 most popular stocks among hedge funds as many of these stocks already outperformed the market since 2019.
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Disclosure: None. This article was originally published at Insider Monkey.