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Did Hedge Funds Drop The Ball On Power Integrations Inc (POWI) ?

Reymerlyn Martin

Insider Monkey has processed numerous 13F filings of hedge funds and famous investors to create an extensive database of hedge fund holdings. The 13F filings show the hedge funds' and investors' positions as of the end of the fourth quarter. You can find write-ups about an individual hedge fund's trades on numerous financial news websites. However, in this article we will take a look at their collective moves and analyze what the smart money thinks of Power Integrations Inc (NASDAQ:POWI) based on that data.

Power Integrations Inc (NASDAQ:POWI) has experienced a decrease in support from the world's most elite money managers in recent months. Our calculations also showed that POWI isn't among the 30 most popular stocks among hedge funds.

In the eyes of most traders, hedge funds are seen as unimportant, old investment tools of yesteryear. While there are over 8000 funds with their doors open at the moment, Our experts choose to focus on the bigwigs of this group, about 750 funds. These investment experts administer the majority of all hedge funds' total capital, and by watching their best picks, Insider Monkey has unearthed many investment strategies that have historically surpassed the market. Insider Monkey's flagship hedge fund strategy outperformed the S&P 500 index by nearly 5 percentage points annually since its inception in May 2014 through early November 2018. We were able to generate large returns even by identifying short candidates. Our portfolio of short stocks lost 27.5% since February 2017 (through March 12th) even though the market was up nearly 25% during the same period. We just shared a list of 6 short targets in our latest quarterly update and they are already down an average of 6% in less than a month.

D. E. Shaw

We're going to check out the recent hedge fund action surrounding Power Integrations Inc (NASDAQ:POWI).

What does the smart money think about Power Integrations Inc (NASDAQ:POWI)?

Heading into the first quarter of 2019, a total of 4 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -56% from the previous quarter. On the other hand, there were a total of 5 hedge funds with a bullish position in POWI a year ago. With the smart money's sentiment swirling, there exists a select group of noteworthy hedge fund managers who were increasing their holdings meaningfully (or already accumulated large positions).

POWI_apr2019

More specifically, Impax Asset Management was the largest shareholder of Power Integrations Inc (NASDAQ:POWI), with a stake worth $80.3 million reported as of the end of December. Trailing Impax Asset Management was PEAK6 Capital Management, which amassed a stake valued at $1.1 million. Holocene Advisors, Citadel Investment Group, and D E Shaw were also very fond of the stock, giving the stock large weights in their portfolios.

Because Power Integrations Inc (NASDAQ:POWI) has faced declining sentiment from the smart money, logic holds that there exists a select few hedge funds that elected to cut their positions entirely heading into Q3. Interestingly, Jim Simons's Renaissance Technologies cut the biggest stake of all the hedgies tracked by Insider Monkey, worth an estimated $4.2 million in stock, and Noam Gottesman's GLG Partners was right behind this move, as the fund cut about $1.4 million worth. These transactions are important to note, as total hedge fund interest dropped by 5 funds heading into Q3.

Let's go over hedge fund activity in other stocks similar to Power Integrations Inc (NASDAQ:POWI). We will take a look at GreenSky, Inc. (NASDAQ:GSKY), Deluxe Corporation (NYSE:DLX), Four Corners Property Trust, Inc. (NYSE:FCPT), and GCP Applied Technologies Inc. (NYSE:GCP). This group of stocks' market valuations match POWI's market valuation.

[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position GSKY,20,33315,0 DLX,24,99926,3 FCPT,13,97064,0 GCP,16,435331,-3 Average,18.25,166409,0 [/table]

View table here if you experience formatting issues.

As you can see these stocks had an average of 18.25 hedge funds with bullish positions and the average amount invested in these stocks was $166 million. That figure was $82 million in POWI's case. Deluxe Corporation (NYSE:DLX) is the most popular stock in this table. On the other hand Four Corners Property Trust, Inc. (NYSE:FCPT) is the least popular one with only 13 bullish hedge fund positions. Compared to these stocks Power Integrations Inc (NASDAQ:POWI) is even less popular than FCPT. Hedge funds clearly dropped the ball on POWI as the stock delivered strong returns, though hedge funds' consensus picks still generated respectable returns. Our calculations showed that top 15 most popular stocks) among hedge funds returned 24.2% through April 22nd and outperformed the S&P 500 ETF (SPY) by more than 7 percentage points. A small number of hedge funds were also right about betting on POWI as the stock returned 27.2% and outperformed the market by an even larger margin.

Disclosure: None. This article was originally published at Insider Monkey.

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