Analysts at Oppenheimer have upgraded their rating for Marvell Technology Group Ltd. (NASDAQ:MRVL) to ‘Market Perform’ from ‘Underperform’ today. Marvell’s stock has also been termed as a “storm in the castle” stock by Trade-Ideas LLC because of the semiconductor company’s impressive 200-day moving average. Marvell’s strengths are its solid financial position with reasonable debt levels, decent valuation levels, and surging profit margins. However, Marvell’s stock is down 3.11% over the last 200 days. Marvell also laid off over 100 employees from its mobile division in Israel recently, in addition to the 200 jobs it cut in Israel last year. The recent job cuts by Marvell are seen in the context of its alleged plans to move its mobile business to China. Several other investment firms have also revised their ratings for Marvell Technology Group Ltd. (NASDAQ:MRVL) recently, including analysts at Goldman Sachs, which upgraded their rating on Marvell to ‘Neutral’ from ‘Sell’ and revised upwards their price target on the stock to $14 from $12 on June 18. The latest analyst upgrade has done nothing to help the shares of the company in trading today, with them down by nearly 2% after falling by more than 4% earlier in the day on overall pessimism for the semiconductor industry.
Apart from the latest stock positions and ratings revisions, factors like hedge funds’ activity and insider transactions are of huge importance in giving a holistic picture about a company’s stock and future growth prospects. 33 of the hedge funds we track at Insider Monkey held long positions in Marvell by the end of the first quarter, whereas one quarter earlier, 31 hedge funds were bullish on the company, which shows a 6% increase in ownership by hedge funds. The total value of hedge funds’ investment for Marvell Technology Group Ltd. (NASDAQ:MRVL) by the end of first quarter of 2015 was approximately $1.02 billion, whereas this figure was around $940 million three months earlier. As shares of Marvell were up only slightly in the first quarter, this shows positive sentiment among the smart money. Since then however, the company has been dragged down by a weakening chip sector that has led to losses for many of its top names in recent days and weeks.
We at Insider Monkey strongly believe in the importance and value of tracking hedge funds’ positions in companies because hedge funds spend large amounts of resources, time, and money to decide their bets on companies. Our experts analyzed the historical stock picks of small-cap companies made by hedge funds and found out that the funds performed far better betting on these companies than they did on large-cap stocks, which is where most of their money is invested and why their performances as a whole have been poor for a number of years. A portfolio of the 15 most popular small-cap stocks among funds outperformed the S&P 500 Total Return Index by 95 basis points per month between 1999 and 2012 in backtesting. The exceptional results of this strategy got even better in forward testing after the strategy went live at the end of August 2012, returning more than 135% and beating the market by more than 80 percentage points since then, and by 4.6 percentage points in the first quarter of this year. (see more details about this)
Insider transactions are another important metric which can give detailed insight about the upcoming prospects for a stock. Zining Wu, Chief Technology Officer at Marvell, sold 51,312 shares of the company at $14.51 per share on June 23 in two separate transactions. There have been no insider purchases recorded in 2015.
Let’s dig deeper into the details of hedge funds’ activity in Marvell Technology Group Ltd. (NASDAQ:MRVL).