Did Hedge Funds Get MagnaChip Semiconductor Corporation (MX) Right?

The latest 13F reporting period has come and gone, and Insider Monkey is again at the forefront when it comes to making use of this gold mine of data. We at Insider Monkey have plowed through 867 13F filings that hedge funds and well-known value investors are required to file by the SEC. The 13F filings show the funds’ and investors’ portfolio positions as of September 30th. Hedge funds’ consensus stock picks performed spectacularly over the last 3 years, but 2022 hasn’t been kind to hedge funds. In this article we look at how hedge funds traded MagnaChip Semiconductor Corporation (NYSE:MX) and determine whether the smart money was really smart about this stock.

Hedge fund interest in MagnaChip Semiconductor Corporation (NYSE:MX) shares was flat at the end of last quarter. This is usually a negative indicator. Our calculations also showed that MX isn’t among the 30 most popular stocks among hedge funds (click for Q3 rankings). At the end of this article we will also compare MX to other stocks including Sohu.com Limited (NASDAQ:SOHU), Immatics N.V. (NASDAQ:IMTX), and Edgewise Therapeutics, Inc. (NASDAQ:EWTX) to get a better sense of its popularity.

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 view the latest hedge fund action encompassing MagnaChip Semiconductor Corporation (NYSE:MX).

Howard Marks of Oaktree Capital

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

At third quarter’s end, a total of 35 of the hedge funds tracked by Insider Monkey were long this stock, a change of 0% from the second quarter of 2021. By comparison, 27 hedge funds held shares or bullish call options in MX a year ago. So, let’s find out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

According to publicly available hedge fund and institutional investor holdings data compiled by Insider Monkey, Stephen Perkins’s Toronado Partners has the biggest position in MagnaChip Semiconductor Corporation (NYSE:MX), worth close to $36.4 million, amounting to 12.8% of its total 13F portfolio. Coming in second is Howard Marks of Oaktree Capital Management, with a $35.6 million position; 0.5% of its 13F portfolio is allocated to the company. Some other hedge funds and institutional investors that hold long positions contain Don Morgan’s Brigade Capital, John Orrico’s Water Island Capital and Israel Englander’s Millennium Management. In terms of the portfolio weights assigned to each position Toronado Partners allocated the biggest weight to MagnaChip Semiconductor Corporation (NYSE:MX), around 12.78% of its 13F portfolio. North Run Capital is also relatively very bullish on the stock, designating 3.39 percent of its 13F equity portfolio to MX.

Since MagnaChip Semiconductor Corporation (NYSE:MX) has experienced bearish sentiment from the aggregate hedge fund industry, we can see that there lies a certain “tier” of money managers who were dropping their entire stakes by the end of the third quarter. At the top of the heap, Robert Emil Zoellner’s Alpine Associates dumped the biggest stake of the “upper crust” of funds watched by Insider Monkey, valued at close to $15.1 million in stock. Douglas Harold Hart Polunin’s fund, Polunin Capital, also dropped its stock, about $5.4 million worth. These transactions are intriguing to say the least, as total hedge fund interest stayed the same (this is a bearish signal in our experience).

Let’s now take a look at hedge fund activity in other stocks similar to MagnaChip Semiconductor Corporation (NYSE:MX). These stocks are Sohu.com Limited (NASDAQ:SOHU), Immatics N.V. (NASDAQ:IMTX), Edgewise Therapeutics, Inc. (NASDAQ:EWTX), Outbrain Inc. (NASDAQ:OB), Armada Hoffler Properties Inc (NYSE:AHH), The First Bancshares, Inc. (NASDAQ:FBMS), and CarParts.com, Inc. (NASDAQ:PRTS). This group of stocks’ market valuations resemble MX’s market valuation.

View table here if you experience formatting issues.

As you can see these stocks had an average of 14.1 hedge funds with bullish positions and the average amount invested in these stocks was $176 million. That figure was $264 million in MX’s case. Immatics N.V. (NASDAQ:IMTX) is the most popular stock in this table. On the other hand Outbrain Inc. (NASDAQ:OB) is the least popular one with only 6 bullish hedge fund positions. Compared to these stocks MagnaChip Semiconductor Corporation (NYSE:MX) is more popular among hedge funds. Our overall hedge fund sentiment score for MX is 85. 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 and still managed to beat the market by another 3.6 percentage points. Hedge funds were somewhat right about betting on MX as the stock returned 0.2% since the end of September (through January 31st) and outperformed the top 5 hedge fund stocks but not the market. This is a rare phenomenon as top hedge fund stocks usually beat the market over the long-term.

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Disclosure: None. This article was originally published at Insider Monkey.