Green investors tend to think that cheap stocks are real bargains, believing that stocks with the lowest prices have the highest potential to generate exorbitant returns. This line of thought is completely wrong, as each stock simply represents a share in the ownership of a company. Each stock is like a piece of a pie and each pie can be cut into many combinations of equal pieces, be it ten pieces or a million. Seasoned investors on the other hand define a cheap stock as a stock that has a relatively low price-to-earnings ratio. Nonetheless, we decided to compile a list of four low-priced technology stocks, which might not necessarily be cheap in terms of valuation. As a retired trader, I can state that most small-scale intra-day traders tend to look for stocks that trade in the range of $10-to-$100 per share, believing that stocks priced under $10 are highly-risky and unsafe. Thus, it is possible to find overlooked gems among stocks whose shares are trading on the cheap. For that reason, we decided to discuss four tech stocks under $10 that managed to capture the attention of a considerable number of investors that we follow.
Sunedison Inc. (NYSE:SUNE)
– Investors with Long Positions (as of September 30): 73
– Aggregate Value of Investors’ Holdings (as of September 30): $1.06 Billion
Sunedison Inc. (NYSE:SUNE) is losing its charm among the hedge funds tracked by Insider Monkey, as the number of smart money investors with positions in the company dropped to 73 from 93 during the third quarter. Most importantly, the value of their investments in the company declined to $1.06 billion from the $5.68 billion figure it stood at on June 30. The global renewable energy development company has a capital-intensive business, a substantial amount of indebtedness that totaled $11.67 billion on September 30, and capital needs in the range of $6.5 billion-to-$8.8 billion for financing the development and construction of renewable energy systems through December 31, 2016. The company’s strategy has solely relied on the sale of certain renewable energy systems to its yieldcos, but the disappointing stock performance of those yieldco subsidiaries has increased the cost of capital to finance SunEdison’s growth strategy. Let’s not forget to mention that the shares of SunEdison are 78% in the red so far this year, and some believe that the company’s ongoing liquidity concerns will push the stock even lower. David Einhorn’s Greenlight Capital cut its exposure to Sunedison Inc. (NYSE:SUNE) by 26% during the third quarter to 18.61 million shares.
Hedge funds have been underperforming the market for a very long time. However, this was mainly because of the huge fees that hedge funds charge as well as the poor performance of their short books. Hedge funds’ long positions actually performed better than the market. Small-cap stocks, activist targets, and spin-offs were among the bright spots in hedge funds’ portfolios. For instance, the 15 most popular small-cap stocks among hedge funds outperformed the market by more than 53 percentage points since the end of August 2012, returning 102% (read the details here). This strategy also managed to beat the market by double digits annually in our back tests covering the 1999-2012 period.
Atmel Corporation (NASDAQ:ATML)
– Investors with Long Positions (as of September 30): 35
– Aggregate Value of Investors’ Holdings (as of September 30): $265.93 Million
35 smart money investors from our database had Atmel Corporation (NASDAQ:ATML) in their portfolios at the end of the September quarter, down from 36. These hedge fund firms had accumulated 7.90% of the company’s outstanding common stock on September 30, while the value of their investments in the company declined to $265.93 million from $364.64 million during the latest quarter. In mid-September, the supplier of general purpose microcontrollers sealed a merger agreement with Dialog Semiconductor PLC, under which Dialog is set to acquire Atmel for $4.65 in cash and 0.112 Dialog ADRs for each Atmel share. This merger agreement yields approximately $8.81 per Atmel share. Meanwhile, Atmel announced on Friday that it had received an unsolicited bid of $9.00 per share in cash and that its Board of Directors intends to engage in discussions with the bidder. Nick Niell’s Arrowgrass Capital Partners acquired a new stake of 4.79 million shares in Atmel Corporation (NASDAQ:ATML) during the third quarter.
Cypress Semiconductor Corporation (NASDAQ:CY)
– Investors with Long Positions (as of September 30): 32
– Aggregate Value of Investors’ Holdings (as of September 30): $649.61 Million
The number of hedge funds from our database with long positions in Cypress Semiconductor Corporation (NASDAQ:CY) decreased to 32 from 35 during the July-to-September period, while the total value of these positions shrank to $649.61 million from $1.03 billion. Hedge funds tracked by Insider Monkey owned nearly 23% of the company’s outstanding shares at the end of the latest quarter. In mid-March, Cypress completed its merger with Spansion Inc., a manufacturer and developer of embedded systems semiconductors, which it acquired for roughly $2.8 billion. As a result of this deal, Cypress’ total revenue for the nine-month period that ended September 27 increased to $1.16 billion from $541.40 million reported for the same period of last year. Soros Fund Management, founded by George Soros, upped its position in Cypress Semiconductor Corporation (NASDAQ:CY) by 25% during the third quarter to 19.81 million shares.
Marvell Technology Group Ltd. (NASDAQ:MRVL)
– Investors with Long Positions (as of September 30): 31
– Aggregate Value of Investors’ Holdings (as of September 30): $373.27 Million
Marvell Technology Group Ltd. (NASDAQ:MRVL)’s shares have been sliding throughout 2015, declining by 43% year-to-date. 31 hedge funds observed by our team were invested in the chipmaker at the end of the third quarter, compared with 36 at the end of the second quarter. The overall value of the money invested in the stock decreased to $373.27 million from $694.90 million quarter-over-quarter. The company’s Audit Committee has been conducting an investigation of certain accounting issues, which includes a review of its revenue recognition practices. Marvell reported third-quarter sales of $674 million, which were down by 28% year-over-year and below analyst expectations of $730.2 million. Meanwhile, its adjusted earnings per share decreased by 83% year-over-year to $0.05, missing analyst estimates of $0.13. Meanwhile, it remains to be seen how the accounting probe will be resolved. Cliff Asness’ AQR Capital Management reported owning 12.44 million shares of Marvell Technology Group Ltd. (NASDAQ:MRVL) through the latest round of 13Fs.