Hedge Funds Are Crazy About Analog Devices, Inc. (ADI)

Before we spend countless hours researching a company, we like to analyze what insiders, hedge funds and billionaire investors think of the stock first. This is a necessary first step in our investment process because our research has shown that the elite investors’ consensus returns have been exceptional. In the following paragraphs, we find out what the billionaire investors and hedge funds think of Analog Devices, Inc. (NASDAQ:ADI).

Analog Devices, Inc. (NASDAQ:ADI) investors should pay attention to an increase in hedge fund interest recently. Analog Devices, Inc. (NASDAQ:ADI) was in 74 hedge funds’ portfolios at the end of September. The all time high for this statistic was previously 62. This means the bullish number of hedge fund positions in this stock currently sits at its new all time high. There were 62 hedge funds in our database with ADI positions at the end of the second quarter. Our calculations also showed that ADI isn’t among the 30 most popular stocks among hedge funds (click for Q3 rankings).

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. Now we’re going to take a glance at the recent hedge fund action surrounding Analog Devices, Inc. (NASDAQ:ADI).

John Armitage of Egerton Capital

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

At the end of September, a total of 74 of the hedge funds tracked by Insider Monkey were long this stock, a change of 19% from the second quarter of 2021. By comparison, 52 hedge funds held shares or bullish call options in ADI a year ago. So, let’s see which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

More specifically, Generation Investment Management was the largest shareholder of Analog Devices, Inc. (NASDAQ:ADI), with a stake worth $641.8 million reported as of the end of September. Trailing Generation Investment Management was Cantillon Capital Management, which amassed a stake valued at $570 million. Egerton Capital Limited, Soroban Capital Partners, and First Pacific Advisors LLC were also very fond of the stock, becoming one of the largest hedge fund holders of the company. In terms of the portfolio weights assigned to each position Glaxis Capital Management allocated the biggest weight to Analog Devices, Inc. (NASDAQ:ADI), around 14.08% of its 13F portfolio. Albar Capital is also relatively very bullish on the stock, designating 9.07 percent of its 13F equity portfolio to ADI.

With a general bullishness amongst the heavyweights, specific money managers were leading the bulls’ herd. Balyasny Asset Management, managed by Dmitry Balyasny, assembled the most valuable position in Analog Devices, Inc. (NASDAQ:ADI). Balyasny Asset Management had $70.2 million invested in the company at the end of the quarter. Peter Rathjens, Bruce Clarke and John Campbell’s Arrowstreet Capital also initiated a $38.5 million position during the quarter. The following funds were also among the new ADI investors: John Hurley’s Cavalry Asset Management, Michel Massoud’s Melqart Asset Management, and Suraj Parkash Chopra’s Force Hill Capital Management.

Let’s now take a look at hedge fund activity in other stocks – not necessarily in the same industry as Analog Devices, Inc. (NASDAQ:ADI) but similarly valued. We will take a look at U.S. Bancorp (NYSE:USB), Gilead Sciences, Inc. (NASDAQ:GILD), PetroChina Company Limited (NYSE:PTR), Automatic Data Processing, Inc. (NASDAQ:ADP), Uber Technologies, Inc. (NYSE:UBER), Altria Group Inc (NYSE:MO), and Brookfield Asset Management Inc. (NYSE:BAM). This group of stocks’ market caps match ADI’s market cap.

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As you can see these stocks had an average of 52.4 hedge funds with bullish positions and the average amount invested in these stocks was $3993 million. That figure was $5699 million in ADI’s case. Uber Technologies, Inc. (NYSE:UBER) is the most popular stock in this table. On the other hand PetroChina Company Limited (NYSE:PTR) is the least popular one with only 7 bullish hedge fund positions. Analog Devices, Inc. (NASDAQ:ADI) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for ADI is 64.6. 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 28.6% in 2021 through November 30th and still beat the market by 5.6 percentage points. Hedge funds were also right about betting on ADI as the stock returned 7.6% since the end of Q3 (through 11/30) and outperformed the market. Hedge funds were rewarded for their relative bullishness.

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