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Hedge Funds Are Warming Up To Power Integrations Inc (POWI)

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The Insider Monkey team has completed processing the quarterly 13F filings for the September quarter submitted by the hedge funds and other money managers included in our extensive database. Most hedge fund investors experienced strong gains on the back of a strong market performance, which certainly propelled them to adjust their equity holdings so as to maintain the desired risk profile. As a result, the relevancy of these public filings and their content is indisputable, as they may reveal numerous high-potential stocks. The following article will discuss the smart money sentiment towards Power Integrations Inc (NASDAQ:POWI).

Is Power Integrations Inc (NASDAQ:POWI) a buy right now? The smart money was betting on the stock. The number of bullish hedge fund positions inched up by 3 recently. Power Integrations Inc (NASDAQ:POWI) was in 24 hedge funds' portfolios at the end of September. The all time high for this statistic was previously 21. This means the bullish number of hedge fund positions in this stock currently sits at its all time high. Our calculations also showed that POWI isn't among the 30 most popular stocks among hedge funds (click for Q3 rankings).

Best Magic Formula Investing Stocks To Buy Now
Best Magic Formula Investing Stocks To Buy Now

Joel Greenblatt of Gotham Asset Management

At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, lithium prices have more than doubled over the past year, so we go through lists like the 10 best EV stocks to pick the next Tesla that will deliver a 10x return. Even though we recommend positions in only a tiny fraction of the companies we analyze, we check out as many stocks as we can. With all of this in mind let's take a look at the key hedge fund action encompassing Power Integrations Inc (NASDAQ:POWI).

Do Hedge Funds Think POWI Is A Good Stock To Buy Now?

Heading into the fourth quarter of 2021, a total of 24 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 14% from the second quarter of 2021. Below, you can check out the change in hedge fund sentiment towards POWI over the last 25 quarters. With hedgies' positions undergoing their usual ebb and flow, there exists a select group of noteworthy hedge fund managers who were upping their stakes substantially (or already accumulated large positions).

Is POWI A Good Stock To Buy?
Is POWI A Good Stock To Buy?

According to publicly available hedge fund and institutional investor holdings data compiled by Insider Monkey, Brian Ashford-Russell and Tim Woolley's Polar Capital has the most valuable position in Power Integrations Inc (NASDAQ:POWI), worth close to $86.6 million, amounting to 0.4% of its total 13F portfolio. Coming in second is Israel Englander of Millennium Management, with a $32.9 million position; less than 0.1%% of its 13F portfolio is allocated to the stock. Some other hedge funds and institutional investors with similar optimism consist of Renaissance Technologies, John Overdeck and David Siegel's Two Sigma Advisors and Ken Griffin's Citadel Investment Group. In terms of the portfolio weights assigned to each position Quantinno Capital allocated the biggest weight to Power Integrations Inc (NASDAQ:POWI), around 0.48% of its 13F portfolio. Polar Capital is also relatively very bullish on the stock, earmarking 0.35 percent of its 13F equity portfolio to POWI.

With a general bullishness amongst the heavyweights, some big names have jumped into Power Integrations Inc (NASDAQ:POWI) headfirst. Gotham Asset Management, managed by Joel Greenblatt, assembled the largest position in Power Integrations Inc (NASDAQ:POWI). Gotham Asset Management had $0.9 million invested in the company at the end of the quarter. Peter Algert's Algert Global also made a $0.9 million investment in the stock during the quarter. The other funds with brand new POWI positions are Hoon Kim's Quantinno Capital, Jinghua Yan's TwinBeech Capital, and Peter Muller's PDT Partners.

Let's now review hedge fund activity in other stocks - not necessarily in the same industry as Power Integrations Inc (NASDAQ:POWI) but similarly valued. We will take a look at Ingredion Incorporated (NYSE:INGR), Red Rock Resorts, Inc. (NASDAQ:RRR), MicroStrategy Incorporated (NASDAQ:MSTR), United States Steel Corporation (NYSE:X), NeoGenomics, Inc. (NASDAQ:NEO), Real Industry Inc (NASDAQ:RELY), and Antero Resources Corp (NYSE:AR). All of these stocks' market caps match POWI's market cap.

[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position INGR,20,391796,-1 RRR,26,439302,0 MSTR,16,181258,0 X,26,576396,-13 NEO,16,105106,3 RELY,24,539250,24 AR,41,973021,8 Average,24.1,458018,3 [/table]

View table here if you experience formatting issues.

As you can see these stocks had an average of 24.1 hedge funds with bullish positions and the average amount invested in these stocks was $458 million. That figure was $193 million in POWI's case. Antero Resources Corp (NYSE:AR) is the most popular stock in this table. On the other hand MicroStrategy Incorporated (NASDAQ:MSTR) is the least popular one with only 16 bullish hedge fund positions. Power Integrations Inc (NASDAQ:POWI) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for POWI is 54. 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. This is a slightly negative signal and we'd rather spend our time researching stocks that hedge funds are piling on. 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 gained 31.1% in 2021 through December 9th and surpassed the market again by 5.1 percentage points. Unfortunately POWI wasn't nearly as popular as these 5 stocks (hedge fund sentiment was quite bearish); POWI investors were disappointed as the stock returned -9.5% since the end of September (through 12/9) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 5 most popular stocks among hedge funds as most of these stocks already outperformed the market in 2021.

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