Hedge Funds Aren’t Crazy About Marvell Technology Group Ltd. (MRVL) Anymore

The worries about the economic slowdown in China and the ongoing uncertainty about the path of interest-rate increases triggered several waves of equity sell-offs during the third quarter. Of course, most hedge funds and other asset managers had to stomach substantial losses during the bloody three-month period, which might have caused some to consider fleeing the U.S. equity markets. Interestingly, smaller-cap stocks registered higher losses than large-capitalization stocks during the September quarter, suggesting that institutional investors heavily discarded seemingly riskier equities amid high uncertainty and turmoil. In fact, the Russell 2000 Index lost 11.9% in the third quarter, while the Standard and Poor’s 500 benchmark declined a mere 6.4%. This article will lay out and discuss the hedge fund and institutional investor sentiment towards Marvell Technology Group Ltd. (NASDAQ:MRVL).

Is Marvell Technology Group Ltd. (NASDAQ:MRVL) an attractive investment now? Money managers are selling. The number of long hedge fund positions went down by 5 lately. The level and the change in hedge fund popularity aren’t the only variables you need to analyze to decipher hedge funds’ perspectives. A stock may witness a boost in popularity but it may still be less popular than similarly priced stocks. That’s why at the end of this article we will examine companies such as Aqua America Inc (NYSE:WTR), Dunkin Brands Group Inc (NASDAQ:DNKN), and B/E Aerospace Inc (NASDAQ:BEAV) to gather more data points.

In the 21st century investor’s toolkit there are a large number of methods shareholders have at their disposal to size up stocks. Two of the most useful methods are hedge fund and insider trading indicators. Our researchers have shown that, historically, those who follow the best picks of the elite money managers can trounce the market by a superb amount (see the details here).

With all of this in mind, let’s check out the new action encompassing Marvell Technology Group Ltd. (NASDAQ:MRVL).

What does the smart money think about Marvell Technology Group Ltd. (NASDAQ:MRVL)?

At Q3’s end, a total of 31 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -14% from one quarter earlier. With hedgies’ sentiment swirling, there exists a few key hedge fund managers who were increasing their holdings considerably (or already accumulated large positions).

Of the funds tracked by Insider Monkey, Cliff Asness’ AQR Capital Management has the most valuable position in Marvell Technology Group Ltd. (NASDAQ:MRVL), worth close to $112.6 million, amounting to 0.2% of its total 13F portfolio. The second largest stake is held by D E Shaw, with a $64.4 million position; the fund has 0.1% of its 13F portfolio invested in the stock. Some other hedge funds and institutional investors with similar optimism contain Ken Griffin’s Citadel Investment Group, Eric Bannasch’s Cadian Capital and John Overdeck and David Siegel’s Two Sigma Advisors.

Seeing as Marvell Technology Group Ltd. (NASDAQ:MRVL) has faced a declination in interest from hedge fund managers, we can see that there lies a certain “tier” of fund managers who were dropping their full holdings heading into Q4. At the top of the heap, Dmitry Balyasny’s Balyasny Asset Management dropped the biggest investment of the “upper crust” of funds tracked by Insider Monkey, totaling close to $61.7 million in stock, and Doug Silverman and Alexander Klabin’s Senator Investment Group was right behind this move, as the fund dumped about $59.3 million worth. These moves are interesting, as aggregate hedge fund interest dropped by 5 funds heading into Q4.

Let’s also examine hedge fund activity in other stocks – not necessarily in the same industry as Marvell Technology Group Ltd. (NASDAQ:MRVL) but similarly valued. These stocks are Aqua America Inc (NYSE:WTR), Dunkin Brands Group Inc (NASDAQ:DNKN), B/E Aerospace Inc (NASDAQ:BEAV), and Health Net, Inc. (NYSE:HNT). All of these stocks’ market caps resemble MRVL’s market cap.

As you can see these stocks had an average of 30.5 hedge funds with bullish positions and the average amount invested in these stocks was $793 million. That figure was $373 million in MRVL’s case. B/E Aerospace Inc (NASDAQ:BEAV) is the most popular stock in this table. On the other hand Aqua America Inc (NYSE:WTR) is the least popular one with only 11 bullish hedge fund positions. Marvell Technology Group Ltd. (NASDAQ:MRVL) is not the most popular stock in this group but hedge fund interest is still above average. This is a slightly positive signal but we’d rather spend our time researching stocks that hedge funds are piling on. In this regard BEAV might be a better candidate to consider a long position.