Should You Follow the Smart Money Back Into Taiwan Semiconductor Mfg. Co. Ltd. (ADR) (TSM)?

Consequently, key money managers were leading the bulls’ herd. Intermede Investment Partners, managed by Barry Dargan, created the biggest position in Taiwan Semiconductor Mfg. Co. Ltd. (ADR) (NYSE:TSM). Intermede Investment Partners had $32.5 million invested in the company at the end of the quarter. Ernest Chow and Jonathan Howe’s Sensato Capital Management also initiated a $6.3 million position during the quarter. The other funds with new positions in the stock are Steve Cohen’s Point72 Asset Management, John Overdeck and David Siegel’s Two Sigma Advisors, and Ken Griffin’s Citadel Investment Group.

Let’s go over hedge fund activity in other stocks similar to Taiwan Semiconductor Mfg. Co. Ltd. (ADR) (NYSE:TSM). These stocks are Altria Group Inc (NYSE:MO), UnitedHealth Group Inc. (NYSE:UNH), Citigroup Inc. (NYSE:C), and PetroChina Company Limited (ADR) (NYSE:PTR). This group of stocks’ market values resemble TSM’s market value.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
MO 40 1770652 -6
UNH 52 2703217 -3
C 97 8707804 0
PTR 11 36044 0

As you can see these stocks had an average of 50 hedge funds with bullish positions and the average amount invested in these stocks was $3.30 billion. That figure was $2.70 billion in TSM’s case. Citigroup Inc. (NYSE:C) is the most popular stock in this table. On the other hand PetroChina Company Limited (ADR) (NYSE:PTR) is the least popular one with only 11 bullish hedge fund positions. Taiwan Semiconductor Mfg. Co. Ltd. (ADR) (NYSE:TSM) is not the least popular stock in this group but hedge fund interest is still below average. This is a slightly negative signal and we’d rather spend our time researching stocks that hedge funds are piling on. In this regard Citigroup might be a better candidate to consider a long position.

Disclosure: None