Hedge Funds Have Never Been This Bullish On Maxim Integrated Products Inc. (MXIM)
Out of thousands of stocks that are currently traded on the market, it is difficult to identify those that will really generate strong returns. Hedge funds and institutional investors spend millions of dollars on analysts with MBAs and PhDs, who are industry experts and well connected to other industry and media insiders on top of that. Individual investors can piggyback the hedge funds employing these talents and can benefit from their vast resources and knowledge in that way. We analyze quarterly 13F filings of nearly 900 hedge funds and, by looking at the smart money sentiment that surrounds a stock, we can determine whether it has the potential to beat the market over the long-term. Therefore, let’s take a closer look at what smart money thinks about Maxim Integrated Products Inc. (NASDAQ:MXIM).
Maxim Integrated Products Inc. (NASDAQ:MXIM) investors should be aware of an increase in activity from the world's largest hedge funds of late. Maxim Integrated Products Inc. (NASDAQ:MXIM) was in 55 hedge funds' portfolios at the end of the first quarter of 2021. The all time high for this statistic was previously 54. This means the bullish number of hedge fund positions in this stock currently sits at its all time high. Our calculations also showed that MXIM isn't among the 30 most popular stocks among hedge funds (click for Q1 rankings).
Why do we pay any attention at all to hedge fund sentiment? Our research has shown that a select group of hedge fund holdings outperformed the S&P 500 ETFs by 115 percentage points since March 2017 (see the details here). That's why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
Matthew Halbower of Pentwater Capital
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Do Hedge Funds Think MXIM Is A Good Stock To Buy Now?
At the end of the first quarter, a total of 55 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 2% from the fourth quarter of 2020. The graph below displays the number of hedge funds with bullish position in MXIM over the last 23 quarters. So, let's find out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
More specifically, Pentwater Capital Management was the largest shareholder of Maxim Integrated Products Inc. (NASDAQ:MXIM), with a stake worth $1000.1 million reported as of the end of March. Trailing Pentwater Capital Management was D E Shaw, which amassed a stake valued at $227.5 million. Alpine Associates, Balyasny Asset Management, and Millennium Management 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 Pentwater Capital Management allocated the biggest weight to Maxim Integrated Products Inc. (NASDAQ:MXIM), around 9.56% of its 13F portfolio. Havens Advisors is also relatively very bullish on the stock, dishing out 9.06 percent of its 13F equity portfolio to MXIM.
As industrywide interest jumped, specific money managers were breaking ground themselves. Taconic Capital, managed by Frank Brosens, assembled the most outsized position in Maxim Integrated Products Inc. (NASDAQ:MXIM). Taconic Capital had $105.5 million invested in the company at the end of the quarter. Daniel S. Och's OZ Management also made a $57.2 million investment in the stock during the quarter. The other funds with new positions in the stock are Larry Foley and Paul Farrell's Bronson Point Partners, Israel Englander's Millennium Management, and Benjamin A. Smith's Laurion Capital Management.
Let's check out hedge fund activity in other stocks - not necessarily in the same industry as Maxim Integrated Products Inc. (NASDAQ:MXIM) but similarly valued. We will take a look at DraftKings Inc. (NASDAQ:DKNG), Arthur J. Gallagher & Co. (NYSE:AJG), Nasdaq, Inc. (NASDAQ:NDAQ), The Clorox Company (NYSE:CLX), AmerisourceBergen Corporation (NYSE:ABC), ZTO Express (Cayman) Inc. (NYSE:ZTO), and New Oriental Education & Technology Group Inc. (NYSE:EDU). This group of stocks' market values match MXIM's market value.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position DKNG,43,966256,-5 AJG,24,283959,0 NDAQ,22,236137,-5 CLX,38,1195544,-1 ABC,43,1177164,-4 ZTO,15,659779,-2 EDU,45,2187946,2 Average,32.9,958112,-2.1 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 32.9 hedge funds with bullish positions and the average amount invested in these stocks was $958 million. That figure was $3238 million in MXIM's case. New Oriental Education & Technology Group Inc. (NYSE:EDU) is the most popular stock in this table. On the other hand ZTO Express (Cayman) Inc. (NYSE:ZTO) is the least popular one with only 15 bullish hedge fund positions. Compared to these stocks Maxim Integrated Products Inc. (NASDAQ:MXIM) is more popular among hedge funds. Our overall hedge fund sentiment score for MXIM is 86. 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 returned 17.2% in 2021 through June 11th but still managed to beat the market by 3.3 percentage points. Hedge funds were also right about betting on MXIM as the stock returned 13.4% since the end of March (through 6/11) and outperformed the market by an even larger margin. Hedge funds were clearly right about piling into this stock relative to other stocks with similar market capitalizations.
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Disclosure: None. This article was originally published at Insider Monkey.
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