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Here’s Why Traders Are Watching Mellanox, Xilinx, Bonanza Creek, and More

Insider Monkey Team

All three indexes are comfortably higher as of late afternoon trading on Wednesday as investors digest the news that the Democrats have won the House and the Republicans have retained control of the Senate. Due to the election's end, uncertainty in the political arena has arguably decreased, and the checks in the political system have increased. Among the stocks catching attention admid the sea of green today are several tech companies and a pair of energy corporations -- Mellanox Technologies Ltd. (NASDAQ:MLNX)Xilinx Inc. (NASDAQ:XLNX)QUALCOMM Incorporated (NASDAQ:QCOM)Bonanza Creek Energy Inc. (NYSE:BCEI), and SRC Energy Inc. (NYSE:SRCI). Let's examine further.

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 17.4% year to date and outperformed the market by more than 14 percentage points this year. This strategy also outperformed the market by 3 percentage points in the fourth quarter despite the market volatility (see the details here). That's why we believe hedge fund sentiment is a useful indicator that investors should pay attention to.


Mellanox Technologies Ltd. (NASDAQ:MLNX) shares have spiked to $94 per share before retreating somewhat after CNBC reported that Xilinx Inc. (NASDAQ:XLNX) has hired a an investment bank, Barclays, to advise it on a potential bid to buy MLNX. Although the report said that a deal "isn't imminent and may not come together", there has been some consolidation in the semiconductor sector of late. After lagging its peers for a number of years, MLNX shares have done well so far in 2018 due to good execution.

In terms of smart money sentiment, Mellanox Technologies Ltd. (NASDAQ:MLNX) was in 36 hedge funds' (out of the around 650 elite funds we track) portfolios at the end of the second quarter of 2018. There were 24 hedge funds in our database with MLNX holdings at the end of the previous quarter. Meanwhile, Xilinx Inc. (NASDAQ:XLNX) was in 28 elite funds' portfolios at the end of the second quarter of 2018., down 2 from the end of Q1.

Although the NASDAQ is in the green, QUALCOMM Incorporated (NASDAQ:QCOM) shares are down 1.6% due to the news that Apple hasn't held talks with the company 'at any level' over the $7 billion the iPhone maker potentially owes QCOM. Given that trials can be costly and could potentially result in a negative outcome for QUALCOMM Incorporated (NASDAQ:QCOM), traders have been less than enthusiastic about shares of the chip maker today. Shares of QCOM are also trending because the company is expected to release its earnings report after market close on Wednesday. According to Yahoo Finance, analysts expect QCOM to earn $0.83 per share on sales of $5.52 billion for the quarter ended September 2018. QCOM was in 41 top fund portfolios at the end of Q2, down from 56 at the end of Q1.

Shares of two energy companies, Bonanza Creek Energy Inc. (NYSE:BCEI) and SRC Energy Inc. (NYSE:SRCI) are each higher by  more than 10% after voters in Colorado voted to reject Proposition 112, which would have made drilling more difficult by mandating at least 2,500 feet separation between drilling activities and vulnerable or occupied areas. Given that BCEI and SRCI both have exposure to the state and the proposed measure, the proposition would likely have increased costs and was a downside risk. Now that the proposition has been rejected, the risks surrounding the two equities are arguably lower, hence the rally.

In terms of smart money holdings among the around 650 funds that we track, the largest stake in Bonanza Creek Energy Inc (NYSE:BCEI) was held by Mangrove Partners, which reported holding $47.1 million worth of stock at the end of June. It was followed by Anchorage Advisors with a $35.5 million position. Other investors bullish on the company included Venor Capital Management, Brigade Capital, and Lyon Street Capital. Heading into the fourth quarter of 2018, a total of 13 of the hedge funds tracked by Insider Monkey held long positions in SRC Energy Inc. (NYSE:SRCI), a change of 44% from the second quarter of 2018.