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Do Hedge Funds Love Analog Devices, Inc. (ADI)?

Nina Todic

We at Insider Monkey have gone over 700 13F filings that hedge funds and prominent investors are required to file by the SEC. The 13F filings show the funds' and investors' portfolio positions as of September 30th. In this article we look at what those investors think of Analog Devices, Inc. (NASDAQ:ADI).

Is Analog Devices, Inc. (NASDAQ:ADI) a buy here? The smart money is becoming less hopeful. The number of long hedge fund positions decreased by 2 in recent months. Our calculations also showed that adi isn't among the 30 most popular stocks among hedge funds.

In today’s marketplace there are many methods stock market investors employ to value their stock investments. Two of the most under-the-radar methods are hedge fund and insider trading signals. Our researchers have shown that, historically, those who follow the best picks of the best hedge fund managers can outclass the market by a superb margin (see the details here).

David Blood

We're going to take a look at the recent hedge fund action regarding Analog Devices, Inc. (NASDAQ:ADI).

Hedge fund activity in Analog Devices, Inc. (NASDAQ:ADI)

Heading into the fourth quarter of 2018, a total of 28 of the hedge funds tracked by Insider Monkey were long this stock, a change of -7% from the previous quarter. By comparison, 31 hedge funds held shares or bullish call options in ADI heading into this year. With hedge funds' capital changing hands, there exists an "upper tier" of noteworthy hedge fund managers who were boosting their stakes significantly (or already accumulated large positions).

No of Hedge Funds with ADI Positions

Among these funds, Generation Investment Management held the most valuable stake in Analog Devices, Inc. (NASDAQ:ADI), which was worth $799.9 million at the end of the third quarter. On the second spot was Cantillon Capital Management which amassed $479.3 million worth of shares. Moreover, Cantillon Capital Management, First Pacific Advisors LLC, and Alkeon Capital Management were also bullish on Analog Devices, Inc. (NASDAQ:ADI), allocating a large percentage of their portfolios to this stock.

Since Analog Devices, Inc. (NASDAQ:ADI) has witnessed falling interest from the entirety of the hedge funds we track, it's safe to say that there lies a certain "tier" of fund managers who were dropping their positions entirely by the end of the third quarter. Interestingly, Anand Parekh's Alyeska Investment Group said goodbye to the largest position of the 700 funds watched by Insider Monkey, comprising close to $102 million in stock, and John Overdeck and David Siegel's Two Sigma Advisors was right behind this move, as the fund sold off about $27.1 million worth. These transactions are interesting, as aggregate hedge fund interest fell by 2 funds by the end of the third quarter.

Let's now review hedge fund activity in other stocks - not necessarily in the same industry as Analog Devices, Inc. (NASDAQ:ADI) but similarly valued. These stocks are Fiat Chrysler Automobiles NV (NYSE:FCAU), The Allstate Corporation (NYSE:ALL), Canon Inc. (NYSE:CAJ), and Autodesk, Inc. (NASDAQ:ADSK). This group of stocks' market values match ADI's market value.

[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position FCAU,33,2254365,4 ALL,34,2104113,2 CAJ,8,99666,1 ADSK,66,3574132,6 Average,35.25,2008069,3.25 [/table]

View table here if you experience formatting issues.

As you can see these stocks had an average of 35.25 hedge funds with bullish positions and the average amount invested in these stocks was $2.01 billion. That figure was $2.93 billion in ADI's case. Autodesk, Inc. (NASDAQ:ADSK) is the most popular stock in this table. On the other hand Canon Inc. (NYSE:CAJ) is the least popular one with only 8 bullish hedge fund positions. Analog Devices, Inc. (NASDAQ:ADI) 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 ADSK might be a better candidate to consider a long position.

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

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