The worries about the economic slowdown in China and the ongoing uncertainty about the path of interest-rate increases triggered several waves of equity sell-offs during the third quarter. Of course, most hedge funds and other asset managers had to stomach substantial losses during the bloody three-month period, which might have caused some to consider fleeing the U.S. equity markets. Interestingly, smaller-cap stocks registered higher losses than large-capitalization stocks during the September quarter, suggesting that institutional investors heavily discarded seemingly riskier equities amid the high uncertainty and turmoil. In fact, the Russell 2000 Index lost 11.9% in the third quarter, while the Standard and Poor’s 500 benchmark declined by a ‘mere’ 6.4%. This article will lay out and discuss the hedge fund and institutional investor sentiment towards Monolithic Power Systems, Inc. (NASDAQ:MPWR).
Monolithic Power Systems, Inc. (NASDAQ:MPWR) was in 16 hedge funds’ portfolios at the end of September. MPWR investors should be aware of sputtering hedge fund interest recently. There were 16 hedge funds in our database with MPWR holdings at the end of the previous quarter.
If you’d ask most investors, hedge funds are perceived as underperforming, old financial vehicles of yesteryear. While there are over 8,000 funds in operation at the moment, experts at Insider Monkey, a website specializing in hedge funds, hone in on the moguls of this group, around 700 funds. These investment experts manage the lion’s share of the hedge fund industry’s total asset base, and by watching their inimitable investments, Insider Monkey has deciphered many investment strategies that have historically outperformed Mr. Market. Insider Monkey’s small-cap hedge fund strategy outperformed the S&P 500 index by 18 percentage points a year for a decade in its back tests.
Keeping this in mind, we’re going to take a look at the new action regarding Monolithic Power Systems, Inc. (NASDAQ:MPWR).
Hedge fund activity in Monolithic Power Systems, Inc. (NASDAQ:MPWR)
At the end of the third quarter, a total of 16 of the hedge funds tracked by Insider Monkey held long positions in this stock, unchanged from the second quarter. With hedgies’ capital changing hands, there exists a select group of notable hedge fund managers who were upping their stakes considerably.
When looking at the hedgies followed by Insider Monkey, Adage Capital Management, managed by Phill Gross and Robert Atchinson, holds the largest position in Monolithic Power Systems, Inc. (NASDAQ:MPWR). Adage Capital Management has a $121.6 million position in the stock, comprising 0.3% of its 13F portfolio. On Adage Capital Management’s heels is Carlson Capital, led by Clint Carlson, holding a $40.6 million position; the fund has 0.5% of its 13F portfolio invested in the stock. Other hedge funds that are bullish comprise Jim Simons’ Renaissance Technologies, Alex Sacerdote’s Whale Rock Capital Management, and D. E. Shaw’s D E Shaw.
Since Monolithic Power Systems, Inc. (NASDAQ:MPWR) has experienced stagnant sentiment from the aggregate hedge fund industry, it’s safe to say that there was a specific group of funds who were dropping their entire positions last quarter. It’s worth mentioning that John Overdeck and David Siegel’s Two Sigma Advisors dumped the largest position of all the hedgies followed by Insider Monkey, valued at close to $2.2 million in stock, and Israel Englander of Millennium Management was right behind this move, as the fund sold off about $1.2 million worth of shares. These bearish behaviors are intriguing to say the least, as total hedge fund interest stayed the same (this is a bearish signal in our experience).
Let’s go over hedge fund activity in other stocks similar to Monolithic Power Systems, Inc. (NASDAQ:MPWR). We will take a look at Rowan Companies PLC (NYSE:RDC), WESCO International, Inc. (NYSE:WCC), Laredo Petroleum Inc (NYSE:LPI), and BofI Holding Inc. (NASDAQ:BOFI). All of these stocks’ market caps match MPWR’s market cap.
|Ticker||No of HFs with positions||Total Value of HF Positions (x1000)||Change in HF Position|
Elite investors are overweight MPWR, owning $220 million worth of shares, totaling 10.90% of its common shares. However, hedge funds in a broader sense are not overly optimistic about its near-term prospects based on it being held by just 16 funds. Thus, smart money is mixed on MPWR, with those who like it, liking it alot. With the results exhibited by the aforementioned tactics, retail investors should always keep an eye on hedge fund activity, and Monolithic Power Systems, Inc. (NASDAQ:MPWR) shareholders fit into this picture quite nicely.