The financial regulations require hedge funds and wealthy investors that exceeded the $100 million equity holdings threshold to file a report that shows their positions at the end of every quarter. Even though it isn't the intention, these filings to a certain extent level the playing field for ordinary investors. The latest round of 13F filings disclosed the funds' positions on March 31st, about a week after the S&P 500 Index bottomed. We at Insider Monkey have made an extensive database of more than 821 of those established hedge funds and famous value investors' filings. In this article, we analyze how these elite funds and prominent investors traded Lam Research Corporation (NASDAQ:LRCX) based on those filings.
Lam Research Corporation (NASDAQ:LRCX) investors should be aware of an increase in hedge fund sentiment of late. LRCX was in 54 hedge funds' portfolios at the end of March. There were 52 hedge funds in our database with LRCX positions at the end of the previous quarter. Our calculations also showed that LRCX 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.
According to most stock holders, hedge funds are seen as slow, old investment vehicles of the past. While there are more than 8000 funds in operation at present, Our researchers look at the top tier of this group, approximately 850 funds. These investment experts watch over bulk of the smart money's total asset base, and by keeping track of their finest picks, Insider Monkey has uncovered a number of investment strategies that have historically outrun the S&P 500 index. Insider Monkey's flagship short hedge fund strategy outstripped the S&P 500 short ETFs by around 20 percentage points annually since its inception in March 2017. Our portfolio of short stocks lost 36% since February 2017 (through May 18th) even though the market was up 30% during the same period. We just shared a list of 8 short targets in our latest quarterly update .
[caption id="attachment_30602" align="aligncenter" width="400"] Philippe Laffont of Coatue Management[/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 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. With all of this in mind we're going to view the new hedge fund action surrounding Lam Research Corporation (NASDAQ:LRCX).
What have hedge funds been doing with Lam Research Corporation (NASDAQ:LRCX)?
At Q1's end, a total of 54 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 4% from the previous quarter. By comparison, 32 hedge funds held shares or bullish call options in LRCX 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.
Among these funds, AQR Capital Management held the most valuable stake in Lam Research Corporation (NASDAQ:LRCX), which was worth $253.5 million at the end of the third quarter. On the second spot was Lansdowne Partners which amassed $216.3 million worth of shares. Alkeon Capital Management, Fisher Asset Management, and Whale Rock Capital 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 Lansdowne Partners allocated the biggest weight to Lam Research Corporation (NASDAQ:LRCX), around 11.99% of its 13F portfolio. Marlowe Partners is also relatively very bullish on the stock, earmarking 11.2 percent of its 13F equity portfolio to LRCX.
As one would reasonably expect, specific money managers were breaking ground themselves. Whale Rock Capital Management, managed by Alex Sacerdote, initiated the biggest position in Lam Research Corporation (NASDAQ:LRCX). Whale Rock Capital Management had $120.7 million invested in the company at the end of the quarter. Philippe Laffont's Coatue Management also made a $120.7 million investment in the stock during the quarter. The following funds were also among the new LRCX investors: Doug Gordon, Jon Hilsabeck and Don Jabro's Shellback Capital, Ryan Caldwell's Chiron Investment Management, and Javier Velazquez's Albar Capital.
Let's go over hedge fund activity in other stocks - not necessarily in the same industry as Lam Research Corporation (NASDAQ:LRCX) but similarly valued. We will take a look at Centene Corporation (NYSE:CNC), Baidu, Inc. (NASDAQ:BIDU), Infosys Limited (NYSE:INFY), and Public Storage (NYSE:PSA). All of these stocks' market caps are similar to LRCX's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position CNC,66,3533228,4 BIDU,49,2234830,-11 INFY,27,970629,2 PSA,27,807200,0 Average,42.25,1886472,-1.25 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 42.25 hedge funds with bullish positions and the average amount invested in these stocks was $1886 million. That figure was $1780 million in LRCX's case. Centene Corporation (NYSE:CNC) is the most popular stock in this table. On the other hand Infosys Limited (NYSE:INFY) is the least popular one with only 27 bullish hedge fund positions. Lam Research Corporation (NASDAQ:LRCX) is not the most popular stock in this group but hedge fund interest is still above average. This is a slightly positive signal but we'd rather spend our time researching stocks that hedge funds are piling on. 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 beat the market by 15.6 percentage points. Unfortunately LRCX wasn't nearly as popular as these 10 stocks and hedge funds that were betting on LRCX were disappointed as the stock returned 8.8% during the same time period and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 10 most popular stocks among hedge funds as many of these stocks already outperformed the market so far this year.
Disclosure: None. This article was originally published at Insider Monkey.