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Micron Technology, Inc. (MU) Fell Out Of Favor With Hedge Funds

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  • MU

Last year we predicted the arrival of the first US recession since 2009 and we told in advance that the market will decline by at least 20% in (Recession is Imminent: We Need A Travel Ban NOW). In these volatile markets we scrutinize hedge fund filings to get a reading on which direction each stock might be going. In this article, we will take a closer look at hedge fund sentiment towards Micron Technology, Inc. (NASDAQ:MU).

Is Micron Technology, Inc. (NASDAQ:MU) a bargain? Prominent investors were in a pessimistic mood. The number of bullish hedge fund positions fell by 24 in recent months. Micron Technology, Inc. (NASDAQ:MU) was in 63 hedge funds' portfolios at the end of the third quarter of 2021. The all time high for this statistic is 100. Our calculations also showed that MU isn't among the 30 most popular stocks among hedge funds (click for Q3 rankings).

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. Keeping this in mind let's take a glance at the key hedge fund action encompassing Micron Technology, Inc. (NASDAQ:MU).

Kerr Neilson of Platinum Asset Management

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

At the end of the third quarter, a total of 63 of the hedge funds tracked by Insider Monkey were long this stock, a change of -28% from one quarter earlier. By comparison, 79 hedge funds held shares or bullish call options in MU a year ago. So, let's review which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

According to Insider Monkey's hedge fund database, Peter Rathjens, Bruce Clarke and John Campbell's Arrowstreet Capital has the number one position in Micron Technology, Inc. (NASDAQ:MU), worth close to $716.9 million, amounting to 0.9% of its total 13F portfolio. The second largest stake is held by Citadel Investment Group, managed by Ken Griffin, which holds a $557.6 million call position; 0.1% of its 13F portfolio is allocated to the company. Remaining professional money managers that are bullish include Seth Klarman's Baupost Group, David Goel and Paul Ferri's Matrix Capital Management and Kerr Neilson's Platinum Asset Management. In terms of the portfolio weights assigned to each position Mohnish Pabrai allocated the biggest weight to Micron Technology, Inc. (NASDAQ:MU), around 58.76% of its 13F portfolio. Pennant Capital Management is also relatively very bullish on the stock, earmarking 13.13 percent of its 13F equity portfolio to MU.

Since Micron Technology, Inc. (NASDAQ:MU) has witnessed declining sentiment from the aggregate hedge fund industry, we can see that there exists a select few hedgies who sold off their positions entirely in the third quarter. It's worth mentioning that Steve Cohen's Point72 Asset Management said goodbye to the largest investment of the 750 funds watched by Insider Monkey, worth close to $187.1 million in stock, and Martin Taylor's Crake Asset Management was right behind this move, as the fund said goodbye to about $148.8 million worth. These moves are interesting, as total hedge fund interest was cut by 24 funds in the third quarter.

Let's go over hedge fund activity in other stocks similar to Micron Technology, Inc. (NASDAQ:MU). We will take a look at Dell Technologies Inc. (NYSE:DELL), The TJX Companies, Inc. (NYSE:TJX), Truist Financial Corporation (NYSE:TFC), HCA Healthcare Inc (NYSE:HCA), Zoom Video Communications, Inc. (NASDAQ:ZM), Marsh & McLennan Companies, Inc. (NYSE:MMC), and General Motors Company (NYSE:GM). This group of stocks' market caps are closest to MU's market cap.

[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position DELL,60,6142951,-2 TJX,63,2330294,7 TFC,34,275906,-5 HCA,72,3309822,12 ZM,56,6003836,-3 MMC,42,1987176,1 GM,77,6416552,-9 Average,57.7,3780934,0.1 [/table]

View table here if you experience formatting issues.

As you can see these stocks had an average of 57.7 hedge funds with bullish positions and the average amount invested in these stocks was $3781 million. That figure was $3841 million in MU's case. General Motors Company (NYSE:GM) is the most popular stock in this table. On the other hand Truist Financial Corporation (NYSE:TFC) is the least popular one with only 34 bullish hedge fund positions. Micron Technology, Inc. (NASDAQ:MU) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for MU is 33.6. 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 gained 28.6% in 2021 through November 30th and still beat the market by 5.6 percentage points. Hedge funds were also right about betting on MU as the stock returned 18.3% since the end of Q3 (through 11/30) 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.