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Hedge Funds Started Cashing Out Of Analog Devices, Inc. (ADI)

Debasis Saha

The latest 13F reporting period has come and gone, and Insider Monkey is again at the forefront when it comes to making use of this gold mine of data. Insider Monkey finished processing 821 13F filings submitted by hedge funds and prominent investors. These filings show these funds' portfolio positions as of March 31st, 2020. What do these smart investors think about Analog Devices, Inc. (NASDAQ:ADI)?

Analog Devices, Inc. (NASDAQ:ADI) shareholders have witnessed a decrease in activity from the world's largest hedge funds lately. Our calculations also showed that ADI 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.

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 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.

Gabriel Plotkin Melvin Capital Management

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 successful trader’s “corona catalyst plays“. We interview hedge fund managers and ask them about their best ideas. If you want to find out the best healthcare stock to buy right now, you can watch our latest hedge fund manager interview here. 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 the S&P 500 was trading at 3150 after realizing the coronavirus pandemic’s significance before most investors. Now let's take a glance at the key hedge fund action surrounding Analog Devices, Inc. (NASDAQ:ADI).

What have hedge funds been doing with Analog Devices, Inc. (NASDAQ:ADI)?

Heading into the second quarter of 2020, a total of 45 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -12% from the previous quarter. Below, you can check out the change in hedge fund sentiment towards ADI over the last 18 quarters. With the smart money's positions undergoing their usual ebb and flow, there exists a few notable hedge fund managers who were upping their stakes considerably (or already accumulated large positions).

Is ADI A Good Stock To Buy?

According to Insider Monkey's hedge fund database, Cantillon Capital Management, managed by William von Mueffling, holds the largest position in Analog Devices, Inc. (NASDAQ:ADI). Cantillon Capital Management has a $443.1 million position in the stock, comprising 4.9% of its 13F portfolio. The second largest stake is held by Robert Rodriguez and Steven Romick of First Pacific Advisors LLC, with a $351.2 million position; 5% of its 13F portfolio is allocated to the stock. Other professional money managers with similar optimism comprise David Blood and Al Gore's Generation Investment Management, Panayotis Takis Sparaggis's Alkeon Capital Management and Alex Snow's Lansdowne Partners. In terms of the portfolio weights assigned to each position Totem Point Management allocated the biggest weight to Analog Devices, Inc. (NASDAQ:ADI), around 12.15% of its 13F portfolio. Lansdowne Partners is also relatively very bullish on the stock, setting aside 7.56 percent of its 13F equity portfolio to ADI.

Due to the fact that Analog Devices, Inc. (NASDAQ:ADI) has experienced bearish sentiment from the aggregate hedge fund industry, logic holds that there were a few fund managers who were dropping their entire stakes by the end of the third quarter. It's worth mentioning that Anand Parekh's Alyeska Investment Group cut the biggest investment of the 750 funds followed by Insider Monkey, totaling close to $56.7 million in stock. Leon Shaulov's fund, Maplela

ne Capital, also said goodbye to its stock, about $16.6 million worth. These bearish behaviors are important to note, as total hedge fund interest fell by 6 funds by the end of the third quarter.

Let's check out hedge fund activity in other stocks similar to Analog Devices, Inc. (NASDAQ:ADI). We will take a look at Sumitomo Mitsui Financial Grp, Inc. (NYSE:SMFG), Banco Bradesco SA (NYSE:BBD), Barrick Gold Corporation (NYSE:GOLD), and Las Vegas Sands Corp. (NYSE:LVS). This group of stocks' market caps match ADI's market cap.

[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position SMFG,10,104520,-1 BBD,15,246087,-3 GOLD,54,1756373,3 LVS,42,1186415,5 Average,30.25,823349,1 [/table]

View table here if you experience formatting issues.

As you can see these stocks had an average of 30.25 hedge funds with bullish positions and the average amount invested in these stocks was $823 million. That figure was $1980 million in ADI's case. Barrick Gold Corporation (NYSE:GOLD) is the most popular stock in this table. On the other hand Sumitomo Mitsui Financial Grp, Inc. (NYSE:SMFG) is the least popular one with only 10 bullish hedge fund positions. Analog Devices, Inc. (NASDAQ:ADI) is not the most popular stock in this group but hedge fund interest is still above average. 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 beat the market by 15.6 percentage points. Hedge funds were also right about betting on ADI as the stock returned 23.9% in Q2 (through May 22nd) and outperformed the market. Hedge funds were rewarded for their relative bullishness.

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

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