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Is Advanced Micro Devices, Inc. (NASDAQ:AMD) a good place to invest some of your money right now? We can gain invaluable insight to help us answer that question by studying the investment trends of top investors, who employ world-class Ivy League graduates, who are given immense resources and industry contacts to put their financial expertise to work. The top picks of these firms have historically outperformed the market when we account for known risk factors, making them very valuable investment ideas.
Is Advanced Micro Devices, Inc. (NASDAQ:AMD) a buy, sell, or hold? Money managers were taking a bearish view. The number of bullish hedge fund bets decreased by 12 in recent months. Advanced Micro Devices, Inc. (NASDAQ:AMD) was in 62 hedge funds' portfolios at the end of March. The all time high for this statistic is 74. Our calculations also showed that AMD isn't among the 30 most popular stocks among hedge funds (click for Q1 rankings). There were 74 hedge funds in our database with AMD positions at the end of the fourth quarter.
So, why do we pay attention to hedge fund sentiment before making any investment decisions? Our research has shown that hedge funds' small-cap stock picks managed to beat the market by double digits annually between 1999 and 2016, but the margin of outperformance has been declining in recent years. Nevertheless, we were still able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by more than 115 percentage points since March 2017 (see the details here). We have been able to outperform the passive index funds by tracking the moves of corporate insiders and hedge funds, and we believe small investors can benefit a lot from reading hedge fund investor letters and 13F filings.
Ken Fisher of Fisher Asset Management
At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, lithium mining is one of the fastest growing industries right now, so we are checking out stock pitches like this emerging lithium stock. We go through lists like the 10 best hydrogen fuel cell stocks to pick the next Tesla that will deliver a 10x return. Even though we recommend positions in only a tiny fraction of the companies we analyze, we check out as many stocks as we can. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. You can subscribe to our free daily newsletter on our homepage. Keeping this in mind we're going to take a gander at the recent hedge fund action surrounding Advanced Micro Devices, Inc. (NASDAQ:AMD).
Do Hedge Funds Think AMD Is A Good Stock To Buy Now?
Heading into the second quarter of 2021, a total of 62 of the hedge funds tracked by Insider Monkey were long this stock, a change of -16% from the previous quarter. The graph below displays the number of hedge funds with bullish position in AMD over the last 23 quarters. With hedgies' sentiment swirling, there exists a few key hedge fund managers who were increasing their stakes meaningfully (or already accumulated large positions).
The largest stake in Advanced Micro Devices, Inc. (NASDAQ:AMD) was held by Citadel Investment Group, which reported holding $1432 million worth of stock at the end of December. It was followed by Fisher Asset Management with a $747.8 million position. Other investors bullish on the company included Arrowstreet Capital, Citadel Investment Group, and Sylebra Capital Management. In terms of the portfolio weights assigned to each position Sylebra Capital Management allocated the biggest weight to Advanced Micro Devices, Inc. (NASDAQ:AMD), around 8.64% of its 13F portfolio. Andar Capital is also relatively very bullish on the stock, dishing out 7.45 percent of its 13F equity portfolio to AMD.
Seeing as Advanced Micro Devices, Inc. (NASDAQ:AMD) has experienced a decline in interest from hedge fund managers, it's safe to say that there is a sect of hedge funds who were dropping their positions entirely by the end of the first quarter. Interestingly, Rajiv Jain's GQG Partners sold off the largest investment of all the hedgies followed by Insider Monkey, worth close to $553.7 million in stock. Andreas Halvorsen's fund, Viking Global, also dropped its stock, about $368.2 million worth. These transactions are important to note, as aggregate hedge fund interest dropped by 12 funds by the end of the first quarter.
Let's also examine hedge fund activity in other stocks - not necessarily in the same industry as Advanced Micro Devices, Inc. (NASDAQ:AMD) but similarly valued. We will take a look at Altria Group Inc (NYSE:MO), Zoom Video Communications, Inc. (NASDAQ:ZM), Stryker Corporation (NYSE:SYK), GlaxoSmithKline plc (NYSE:GSK), Vale SA (NYSE:VALE), British American Tobacco plc (NYSE:BTI), and Anthem Inc (NYSE:ANTM). This group of stocks' market caps are closest to AMD's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position MO,38,1109493,1 ZM,54,5672277,-5 SYK,46,3154010,2 GSK,25,1359731,-5 VALE,31,2615665,-4 BTI,14,1034777,4 ANTM,58,5373054,-12 Average,38,2902715,-2.7 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 38 hedge funds with bullish positions and the average amount invested in these stocks was $2903 million. That figure was $3703 million in AMD's case. Anthem Inc (NYSE:ANTM) is the most popular stock in this table. On the other hand British American Tobacco plc (NYSE:BTI) is the least popular one with only 14 bullish hedge fund positions. Compared to these stocks Advanced Micro Devices, Inc. (NASDAQ:AMD) is more popular among hedge funds. Our overall hedge fund sentiment score for AMD is 68.1. Stocks with higher number of hedge fund positions relative to other stocks as well as relative to their historical range receive a higher sentiment score. Our calculations showed that top 5 most popular stocks among hedge funds returned 95.8% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 40 percentage points. These stocks gained 17.2% in 2021 through June 11th and still beat the market by 3.3 percentage points. Unfortunately AMD wasn't nearly as popular as these 5 stocks and hedge funds that were betting on AMD were disappointed as the stock returned 3.6% since the end of the first quarter (through 6/11) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 5 most popular stocks among hedge funds as most of these stocks already outperformed the market since 2019.
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Disclosure: None. This article was originally published at Insider Monkey.