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In this article you are going to find out whether hedge funds think Maxim Integrated Products Inc. (NASDAQ:MXIM) is a good investment right now. We like to check what the smart money thinks first before doing extensive research on a given stock. Although there have been several high profile failed hedge fund picks, the consensus picks among hedge fund investors have historically outperformed the market after adjusting for known risk attributes. It's not surprising given that hedge funds have access to better information and more resources to predict the winners in the stock market.
Is MXIM stock a buy or sell? The smart money was becoming more confident. The number of bullish hedge fund bets rose by 2 recently. Maxim Integrated Products Inc. (NASDAQ:MXIM) was in 54 hedge funds' portfolios at the end of December. The all time high for this statistic is 52. 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 Q4 rankings). There were 52 hedge funds in our database with MXIM holdings at the end of September.
Hedge funds' reputation as shrewd investors has been tarnished in the last decade as their hedged returns couldn't keep up with the unhedged returns of the market indices. Our research was able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by more than 124 percentage points since March 2017 (see the details here).
Dmitry Balyasny of Balyasny Asset Management
At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, lithium mining is one of the fastest growing industries right now, so we are checking out stock pitches like this emerging lithium stock. We go through lists like the 10 best hydrogen fuel cell 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. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. You can subscribe to our free daily newsletter on our homepage (or at the end of this article). With all of this in mind we're going to analyze the key hedge fund action surrounding Maxim Integrated Products Inc. (NASDAQ:MXIM).
Do Hedge Funds Think MXIM Is A Good Stock To Buy Now?
At fourth quarter'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 third quarter of 2020. By comparison, 32 hedge funds held shares or bullish call options in MXIM 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.
Among these funds, Pentwater Capital Management held the most valuable stake in Maxim Integrated Products Inc. (NASDAQ:MXIM), which was worth $797.9 million at the end of the fourth quarter. On the second spot was Millennium Management which amassed $245.1 million worth of shares. D E Shaw, Alpine Associates, and Balyasny Asset 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 Havens Advisors allocated the biggest weight to Maxim Integrated Products Inc. (NASDAQ:MXIM), around 9.74% of its 13F portfolio. Pentwater Capital Management is also relatively very bullish on the stock, earmarking 9.64 percent of its 13F equity portfolio to MXIM.
Consequently, specific money managers were leading the bulls' herd. Berry Street Capital, managed by Orkun Kilic, created the most valuable position in Maxim Integrated Products Inc. (NASDAQ:MXIM). Berry Street Capital had $19.1 million invested in the company at the end of the quarter. Michael Hintze's CQS Cayman LP also initiated a $12 million position during the quarter. The other funds with brand new MXIM positions are Andrew Sandler's Sandler Capital Management, Wayne Yu's BCK Capital, and Andrew Weiss's Weiss Asset Management.
Let's also examine 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 Rogers Communications Inc. (NYSE:RCI), Tyson Foods, Inc. (NYSE:TSN), DTE Energy Company (NYSE:DTE), Equifax Inc. (NYSE:EFX), Cloudflare, Inc. (NYSE:NET), PT Telekomunikasi Indonesia (NYSE:TLK), and Lennar Corporation (NYSE:LEN). This group of stocks' market values resemble MXIM's market value.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position RCI,15,279915,0 TSN,38,867498,2 DTE,29,309932,1 EFX,36,2262542,-6 NET,60,1182477,16 TLK,4,173765,-4 LEN,52,1529604,-8 Average,33.4,943676,0.1 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 33.4 hedge funds with bullish positions and the average amount invested in these stocks was $944 million. That figure was $2844 million in MXIM's case. Cloudflare, Inc. (NYSE:NET) is the most popular stock in this table. On the other hand PT Telekomunikasi Indonesia (NYSE:TLK) is the least popular one with only 4 bullish hedge fund positions. Maxim Integrated Products Inc. (NASDAQ:MXIM) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for MXIM is 81.6. 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. 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 30 most popular stocks among hedge funds returned 81.2% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 26 percentage points. These stocks gained 5.3% in 2021 through March 19th and beat the market again by 0.8 percentage points. Unfortunately MXIM wasn't nearly as popular as these 30 stocks and hedge funds that were betting on MXIM were disappointed as the stock returned 0.8% since the end of December (through 3/19) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 30 most popular stocks among hedge funds as many of these stocks already outperformed the market since 2019.
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Disclosure: None. This article was originally published at Insider Monkey.