Do Hedge Funds Love Mellanox Technologies, Ltd. (MLNX)?

With the third-quarter round of 13F filings behind us it is time to take a look at the stocks in which some of the best money managers in the world preferred to invest or sell heading into the fourth quarter. One of these stocks was Mellanox Technologies, Ltd. (NASDAQ:MLNX).

Mellanox Technologies, Ltd. (NASDAQ:MLNX) shareholders have witnessed a decrease in hedge fund sentiment in recent months. At the end of this article we will also compare MLNX to other stocks, including Eastgroup Properties Inc (NYSE:EGP), Heartland Express, Inc. (NASDAQ:HTLD), and Proto Labs Inc (NYSE:PRLB) to get a better sense of its popularity.

Today there are several gauges stock traders employ to assess their stock investments. A pair of the most under-the-radar gauges are hedge fund and insider trading activity. Our experts have shown that, historically, those who follow the top picks of the top fund managers can outperform their index-focused peers by a healthy amount (see the details here).

Now, we’re going to take a glance at the new action regarding Mellanox Technologies, Ltd. (NASDAQ:MLNX).

How have hedgies been trading Mellanox Technologies, Ltd. (NASDAQ:MLNX)?

Heading into Q4, a total of 33 of the hedge funds tracked by Insider Monkey were bullish on this stock, down by 3% from one quarter earlier. With hedgies’ capital changing hands, there exists an “upper tier” of key hedge fund managers who were boosting their holdings significantly (or already accumulated large positions).

According to Insider Monkey’s hedge fund database, Scopia Capital, managed by Matt Sirovich and Jeremy Mindich, holds the largest position in Mellanox Technologies, Ltd. (NASDAQ:MLNX). According to its latest quarterly report, the fund has a $117.3 million position in the stock, comprising 2.5% of its 13F portfolio. Coming in second is Richard Mashaal of Rima Senvest Management, with a $57.7 million position; the fund has 4.2% of its 13F portfolio invested in the stock. Other peers with similar optimism comprise Ken Griffin’s Citadel Investment Group, Jim Simons’s Renaissance Technologies and Ken Grossman and Glen Schneider’s SG Capital Management.

Seeing as Mellanox Technologies, Ltd. (NASDAQ:MLNX) has faced bearish sentiment from the aggregate hedge fund industry, it’s safe to say that there were a few fund managers who sold off their full holdings by the end of the third quarter. Interestingly, Clifford Fox’s Columbus Circle Investors dumped the largest investment of the 700 funds monitored by Insider Monkey, totaling about $48.9 million in stock, and Paul Marshall and Ian Wace’s Marshall Wace LLP was right behind this move, as the fund said goodbye to about $7.1 million worth of shares. These bearish behaviors are interesting, as total hedge fund interest dropped by 1 fund by the end of the third quarter.

Let’s now review hedge fund activity in other stocks – not necessarily in the same industry as Mellanox Technologies, Ltd. (NASDAQ:MLNX) but similarly valued. These stocks are Eastgroup Properties Inc (NYSE:EGP), Heartland Express, Inc. (NASDAQ:HTLD), Proto Labs Inc (NYSE:PRLB), and Granite Real Estate Investment Trust (NYSE:GRP). All of these stocks’ market caps are closest to MLNX’s market cap.

As you can see these stocks had an average of 11 hedge funds with bullish positions and the average amount invested in these stocks was $82 million. That figure was $411 million in MLNX’s case. Eastgroup Properties Inc (NYSE:EGP) is the most popular stock in this table. On the other hand Granite Real Estate Investment Trust (NYSE:GRP) is the least popular one with only 7 bullish hedge fund positions. Compared to these stocks Mellanox Technologies, Ltd. (NASDAQ:MLNX) is more popular among hedge funds and has attracted a lot more of the their money. Considering that hedge funds are fond of this stock in relation to its market cap peers, it may be a good idea to analyze it in detail and potentially include it in your portfolio.