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Were Hedge Funds Right About Marvell Technology Group Ltd. (MRVL)?

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  • MRVL

The financial regulations require hedge funds and wealthy investors that exceeded the $100 million 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 June 30th. We at Insider Monkey have made an extensive database of more than 873 of those established hedge funds and famous value investors' filings. In this article, we analyze how these elite funds and prominent investors traded Marvell Technology Group Ltd. (NASDAQ:MRVL) based on those filings.

Marvell Technology Group Ltd. (NASDAQ:MRVL) was in 51 hedge funds' portfolios at the end of the second quarter of 2021. The all time high for this statistic was previously 50. This means the bullish number of hedge fund positions in this stock currently sits at its all time high. MRVL has experienced an increase in support from the world's most elite money managers in recent months. There were 33 hedge funds in our database with MRVL positions at the end of the first quarter. Our calculations also showed that MRVL isn't among the 30 most popular stocks among hedge funds (click for Q2 rankings).

So, why do we pay attention to hedge fund sentiment before making any investment decisions? Our research has shown that hedge funds' small-cap stock picks managed to beat the market by double digits annually between 1999 and 2016, but the margin of outperformance has been declining in recent years. Nevertheless, we were still able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by more than 79 percentage points since March 2017 (see the details here). We have been able to outperform the passive index funds by tracking the moves of corporate insiders and hedge funds, and we believe small investors can benefit a lot from reading hedge fund investor letters and 13F filings.

Billionaire Ken Griffin's Top 10 Stocks Holdings
Billionaire Ken Griffin's Top 10 Stocks Holdings

Ken Griffin of Citadel Investment Group

At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, billionaire John Paulson is loading up on the miners, so we are checking out stock pitches like this mining stock. 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. 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. With all of this in mind let's analyze the new hedge fund action surrounding Marvell Technology Group Ltd. (NASDAQ:MRVL).

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

At second quarter's end, a total of 51 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 55% from the previous quarter. The graph below displays the number of hedge funds with bullish position in MRVL over the last 24 quarters. So, let's find out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

Is MRVL A Good Stock To Buy?
Is MRVL A Good Stock To Buy?

Among these funds, Jericho Capital Asset Management held the most valuable stake in Marvell Technology Group Ltd. (NASDAQ:MRVL), which was worth $274.6 million at the end of the second quarter. On the second spot was Citadel Investment Group which amassed $265.8 million worth of shares. Polar Capital, Holocene Advisors, and Citadel Investment Group 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 Totem Point Management allocated the biggest weight to Marvell Technology Group Ltd. (NASDAQ:MRVL), around 7.73% of its 13F portfolio. Cavalry Asset Management is also relatively very bullish on the stock, earmarking 7.43 percent of its 13F equity portfolio to MRVL.

Now, specific money managers were breaking ground themselves. Jericho Capital Asset Management, managed by Josh Resnick, created the largest position in Marvell Technology Group Ltd. (NASDAQ:MRVL). Jericho Capital Asset Management had $274.6 million invested in the company at the end of the quarter. Brian Ashford-Russell and Tim Woolley's Polar Capital also initiated a $231.9 million position during the quarter. The other funds with brand new MRVL positions are John Hurley's Cavalry Asset Management, Dmitry Balyasny's Balyasny Asset Management, and Kevin Cottrell and Chris LaSusa's KCL Capital.

Let's check out hedge fund activity in other stocks similar to Marvell Technology Group Ltd. (NASDAQ:MRVL). We will take a look at Vodafone Group Plc (NASDAQ:VOD), Veeva Systems Inc (NYSE:VEEV), Dow Inc. (NYSE:DOW), Sumitomo Mitsui Financial Grp, Inc. (NYSE:SMFG), Bilibili Inc. (NASDAQ:BILI), IQVIA Holdings, Inc. (NYSE:IQV), and Walgreens Boots Alliance Inc (NASDAQ:WBA). This group of stocks' market caps resemble MRVL's market cap.

[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position VOD,17,703238,0 VEEV,44,1544061,5 DOW,40,518571,-1 SMFG,11,59990,-3 BILI,47,2001370,-6 IQV,69,3809269,7 WBA,41,1113117,0 Average,38.4,1392802,0.3 [/table]

View table here if you experience formatting issues.

As you can see these stocks had an average of 38.4 hedge funds with bullish positions and the average amount invested in these stocks was $1393 million. That figure was $1390 million in MRVL's case. IQVIA Holdings, Inc. (NYSE:IQV) 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 11 bullish hedge fund positions. Marvell Technology Group Ltd. (NASDAQ:MRVL) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for MRVL is 74.5. 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 29.6% in 2021 through November 5th and still beat the market by 3.1 percentage points. Hedge funds were also right about betting on MRVL as the stock returned 23.4% since the end of Q2 (through 11/5) 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.