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Hedge Funds Cashing Out Of NXP Semiconductors NV (NXPI)

Abigail Fisher

Insider Monkey has processed numerous 13F filings of hedge funds and successful value investors to create an extensive database of hedge fund holdings. The 13F filings show the hedge funds' and successful investors' positions as of the end of the first quarter. You can find articles 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 over the last 4.5 years and analyze what the smart money thinks of NXP Semiconductors NV (NASDAQ:NXPI) based on that data.

NXP Semiconductors NV (NASDAQ:NXPI) investors should be aware of a decrease in support from the world's most elite money managers lately. NXPI was in 52 hedge funds' portfolios at the end of the first quarter of 2020. There were 80 hedge funds in our database with NXPI holdings at the end of the previous quarter. Our calculations also showed that NXPI isn't among the 30 most popular stocks among hedge funds (click for Q1 rankings and see the video for a quick look at the top 5 stocks). Video: Watch our video about the top 5 most popular hedge fund stocks.

Hedge funds' reputation as shrewd investors has been tarnished in the last decade as their hedged returns couldn't keep up with the unhedged returns of the market indices. Our research was able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by more than 44 percentage points since March 2017 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that'll significantly underperform the market. We have been tracking and sharing the list of these stocks since February 2017 and they lost 36% through May 18th. That's why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.

[caption id="attachment_221400" align="aligncenter" width="399"] Crispin Odey of Odey Asset Management Group[/caption]

At Insider Monkey we leave no stone unturned when looking for the next great investment idea.  For example, we are still not out of the woods in terms of the coronavirus pandemic. So, we checked out this analyst’s “corona catalyst plays“. We interview hedge fund managers and ask them about their best ideas. You can watch our latest hedge fund manager interview here and find out the name of the large-cap healthcare stock that Sio Capital’s Michael Castor expects to double. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. Our best call in 2020 was shorting the market when S&P 500 was trading at 3150 after realizing the coronavirus pandemic’s significance before most investors. Keeping this in mind we're going to take a look at the recent hedge fund action surrounding NXP Semiconductors NV (NASDAQ:NXPI).

What does smart money think about NXP Semiconductors NV (NASDAQ:NXPI)?

Heading into the second quarter of 2020, a total of 52 of the hedge funds tracked by Insider Monkey were long this stock, a change of -35% from the previous quarter. By comparison, 52 hedge funds held shares or bullish call options in NXPI a year ago. So, let's see which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

More specifically, Point72 Asset Management was the largest shareholder of NXP Semiconductors NV (NASDAQ:NXPI), with a stake worth $182.8 million reported as of the end of September. Trailing Point72 Asset Management was Citadel Investment Group, which amassed a stake valued at $152.4 million. D E Shaw, Arrowstreet Capital, and Southpoint Capital Advisors were also very fond of the stock, becoming one of the largest hedge fund holders of the company. In terms of the portfolio weights assigned to each position Proxima Capital Management allocated the biggest weight to NXP Semiconductors NV (NASDAQ:NXPI), around 6.21% of its 13F portfolio. Sessa Capital is also relatively very bullish on the stock, designating 5.94 percent of its 13F equity portfolio to NXPI.

Due to the fact that NXP Semiconductors NV (NASDAQ:NXPI) has experienced declining sentiment from the entirety of the hedge funds we track, it's easy to see that there was a specific group of hedgies that elected to cut their positions entirely in the third quarter. At the top of the heap, Eric W. Mandelblatt and Gaurav Kapadia's Soroban Capital Partners sold off the biggest position of all the hedgies followed by Insider Monkey, comprising about $643.3 million in stock, and Brandon Haley's Holocene Advisors was right behind this move, as the fund cut about $169.2 million worth. These bearish behaviors are intriguing to say the least, as aggregate hedge fund interest fell by 28 funds in the third quarter.

Let's now take a look at hedge fund activity in other stocks similar to NXP Semiconductors NV (NASDAQ:NXPI). We will take a look at Veeva Systems Inc (NYSE:VEEV), SYSCO Corporation (NYSE:SYY), Capital One Financial Corp. (NYSE:COF), and Canon Inc. (NYSE:CAJ). This group of stocks' market caps match NXPI's market cap.

[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position VEEV,33,352902,-11 SYY,35,1783679,7 COF,50,1107098,0 CAJ,7,46934,-1 Average,31.25,822653,-1.25 [/table]

View table here if you experience formatting issues.

As you can see these stocks had an average of 31.25 hedge funds with bullish positions and the average amount invested in these stocks was $823 million. That figure was $1234 million in NXPI's case. Capital One Financial Corp. (NYSE:COF) is the most popular stock in this table. On the other hand Canon Inc. (NYSE:CAJ) is the least popular one with only 7 bullish hedge fund positions. Compared to these stocks NXP Semiconductors NV (NASDAQ:NXPI) is more popular among hedge funds. Our calculations showed that top 10 most popular stocks among hedge funds returned 41.4% in 2019 and outperformed the S&P 500 ETF (SPY) by 10.1 percentage points. These stocks gained 7.9% in 2020 through May 22nd but still managed to beat the market by 15.6 percentage points. Hedge funds were also right about betting on NXPI, though not to the same extent, as the stock returned 18.6% in Q2 (through May 22nd) and outperformed the market as well.

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

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