Do Hedge Funds and Insiders Love Broadcom Corporation (BRCM)?

Is Broadcom Corporation (NASDAQ:BRCM) a bargain? Money managers are reducing their bets on the stock. The number of bullish hedge fund bets were trimmed by 8 lately.

In the eyes of most traders, hedge funds are perceived as underperforming, outdated investment tools of years past. While there are greater than 8000 funds with their doors open today, we hone in on the bigwigs of this club, around 450 funds. It is widely believed that this group controls most of all hedge funds’ total capital, and by paying attention to their top picks, we have come up with a number of investment strategies that have historically outstripped the broader indices. Our small-cap hedge fund strategy outpaced the S&P 500 index by 18 percentage points a year for a decade in our back tests, and since we’ve started sharing our picks with our subscribers at the end of August 2012, we have outpaced the S&P 500 index by 23.3 percentage points in 8 months (see the details here).

Equally as beneficial, positive insider trading sentiment is a second way to parse down the investments you’re interested in. Just as you’d expect, there are a number of motivations for an executive to get rid of shares of his or her company, but just one, very obvious reason why they would initiate a purchase. Plenty of empirical studies have demonstrated the useful potential of this tactic if you know where to look (learn more here).

Now, we’re going to take a glance at the recent action surrounding Broadcom Corporation (NASDAQ:BRCM).

What does the smart money think about Broadcom Corporation (NASDAQ:BRCM)?

At Q1’s end, a total of 31 of the hedge funds we track were bullish in this stock, a change of -21% from the previous quarter. With the smart money’s sentiment swirling, there exists a select group of noteworthy hedge fund managers who were increasing their holdings considerably.

When looking at the hedgies we track, Citadel Investment Group, managed by Ken Griffin, holds the most valuable position in Broadcom Corporation (NASDAQ:BRCM). Citadel Investment Group has a $244.4 million position in the stock, comprising 0.4% of its 13F portfolio. On Citadel Investment Group’s heels is Coatue Management, managed by Philippe Laffont, which held a $225.8 million position; the fund has 2.8% of its 13F portfolio invested in the stock. Other hedgies that are bullish include David Tepper’s Appaloosa Management LP, Jim Simons’s Renaissance Technologies and Steven Cohen’s SAC Capital Advisors.

Seeing as Broadcom Corporation (NASDAQ:BRCM) has witnessed bearish sentiment from hedge fund managers, it’s easy to see that there lies a certain “tier” of funds who sold off their positions entirely at the end of the first quarter. Intriguingly, Matthew Tewksbury’s Stevens Capital Management dumped the largest investment of the 450+ funds we watch, totaling an estimated $21.5 million in stock.. Peter Rathjens, Bruce Clarke and John Campbell’s fund, Arrowstreet Capital, also sold off its stock, about $16 million worth. These bearish behaviors are interesting, as total hedge fund interest fell by 8 funds at the end of the first quarter.

Insider trading activity in Broadcom Corporation (NASDAQ:BRCM)

Insider trading activity, especially when it’s bullish, is particularly usable when the company in focus has seen transactions within the past half-year. Over the latest 180-day time period, Broadcom Corporation (NASDAQ:BRCM) has seen zero unique insiders buying, and 10 insider sales (see the details of insider trades here).

Let’s go over hedge fund and insider activity in other stocks similar to Broadcom Corporation (NASDAQ:BRCM). These stocks are Skyworks Solutions Inc (NASDAQ:SWKS), Taiwan Semiconductor Mfg. Co. Ltd. (ADR) (NYSE:TSM), Marvell Technology Group Ltd. (NASDAQ:MRVL), Xilinx, Inc. (NASDAQ:XLNX), and Analog Devices, Inc. (NASDAQ:ADI). This group of stocks are the members of the semiconductor – integrated circuits industry and their market caps are similar to BRCM’s market cap.