The financial regulations require hedge funds and wealthy investors that crossed 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 June 28th. We at Insider Monkey have made an extensive database of nearly 750 of those established hedge funds and famous value investors' filings. In this article, we analyze how these elite funds and prominent investors traded Altera Corporation (NASDAQ:ALTR) based on those filings.
Altera Corporation (NASDAQ:ALTR) has experienced a decrease in hedge fund sentiment of late. ALTR was in 14 hedge funds' portfolios at the end of June. There were 18 hedge funds in our database with ALTR holdings at the end of the previous quarter. Our calculations also showed that ALTR isn't among the 30 most popular stocks among hedge funds (see the video below). Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.
In the financial world there are a large number of tools investors have at their disposal to grade stocks. A pair of the most under-the-radar tools are hedge fund and insider trading indicators. We have shown that, historically, those who follow the top picks of the best fund managers can outperform the broader indices by a solid amount. Insider Monkey's flagship best performing hedge funds strategy returned 25.8% year to date (through May 30th) and outperformed the market even though it draws its stock picks among small-cap stocks. This strategy also outperformed the market by 40 percentage points since its inception (see the details here). That's why we believe hedge fund sentiment is a useful indicator that investors should pay attention to.
Unlike former hedge manager, Dr. Steve Sjuggerud, who is convinced Dow will soar past 40000, our long-short investment strategy doesn't rely on bull markets to deliver double digit returns. We only rely on hedge fund buy/sell signals. We're going to take a gander at the latest hedge fund action regarding Altera Corporation (NASDAQ:ALTR).
How are hedge funds trading Altera Corporation (NASDAQ:ALTR)?
Heading into the third quarter of 2019, a total of 14 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -22% from one quarter earlier. Below, you can check out the change in hedge fund sentiment towards ALTR over the last 16 quarters. With hedge funds' sentiment swirling, there exists a select group of noteworthy hedge fund managers who were increasing their holdings substantially (or already accumulated large positions).
Among these funds, Polar Capital held the most valuable stake in Altera Corporation (NASDAQ:ALTR), which was worth $27.9 million at the end of the second quarter. On the second spot was Balyasny Asset Management which amassed $12.3 million worth of shares. Moreover, Driehaus Capital, Royce & Associates, and Alkeon Capital Management were also bullish on Altera Corporation (NASDAQ:ALTR), allocating a large percentage of their portfolios to this stock.
Judging by the fact that Altera Corporation (NASDAQ:ALTR) has witnessed bearish sentiment from the smart money, it's safe to say that there exists a select few funds that elected to cut their entire stakes by the end of the second quarter. It's worth mentioning that Peter Rathjens, Bruce Clarke and John Campbell's Arrowstreet Capital sold off the biggest stake of all the hedgies followed by Insider Monkey, valued at an estimated $7.2 million in stock, and Israel Englander's Millennium Management was right behind this move, as the fund dumped about $2.8 million worth. These transactions are interesting, as aggregate hedge fund interest fell by 4 funds by the end of the second quarter.
Let's now review hedge fund activity in other stocks similar to Altera Corporation (NASDAQ:ALTR). These stocks are Cathay General Bancorp (NASDAQ:CATY), Advanced Disposal Services, Inc. (NYSE:ADSW), Steven Madden, Ltd. (NASDAQ:SHOO), and Pivotal Software, Inc. (NYSE:PVTL). All of these stocks' market caps are closest to ALTR's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position CATY,12,38123,-2 ADSW,26,559342,14 SHOO,14,48056,-4 PVTL,20,169491,-5 Average,18,203753,0.75 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 18 hedge funds with bullish positions and the average amount invested in these stocks was $204 million. That figure was $81 million in ALTR's case. Advanced Disposal Services, Inc. (NYSE:ADSW) is the most popular stock in this table. On the other hand Cathay General Bancorp (NASDAQ:CATY) is the least popular one with only 12 bullish hedge fund positions. Altera Corporation (NASDAQ:ALTR) is not the least popular stock in this group but hedge fund interest is still below average. 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 20 most popular stocks among hedge funds returned 24.4% in 2019 through September 30th and outperformed the S&P 500 ETF (SPY) by 4 percentage points. Unfortunately ALTR wasn't nearly as popular as these 20 stocks (hedge fund sentiment was quite bearish); ALTR investors were disappointed as the stock returned -14.3% during the third quarter and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 20 most popular stocks among hedge funds as many of these stocks already outperformed the market so far in 2019.
Disclosure: None. This article was originally published at Insider Monkey.