Hedge Funds Aren’t Crazy About Silicon Laboratories (SLAB) Anymore

Hedge funds are not perfect. They have their bad picks just like everyone else. Micron, a stock hedge funds have loved, lost 50% during the last 12 months ending in October 30. Although hedge funds are not perfect, their consensus picks do deliver solid returns, however. Our data show the top 30 S&P 500 stocks among hedge funds at the end of September 2014 yielded an average return of 9.5% in the same time period, vs. a gain of 5.2% for the S&P 500 Index. Because hedge funds have a lot of resources and their consensus picks do well, we pay attention to what they think. In this article, we analyze what the elite funds think of Silicon Laboratories (NASDAQ:SLAB).

Silicon Laboratories (NASDAQ:SLAB) has experienced a decrease in enthusiasm from smart money lately. It is important to note that the stock market has traded Silicon Laboratories (NASDAQ:SLAB) in a similar manner, with its stock losing 23.09% value during the quarter. In order to find out more about the hedge fund sentiment, we will cover hedge funds that held positions in Silicon Laboratories (NASDAQ:SLAB), at the end of the last quarter.

At the end of this article, we will also compare Silicon Laboratories (NASDAQ:SLAB) to other stocks including CVB Financial Corp. (NASDAQ:CVBF), Selective Insurance Group (NASDAQ:SIGI), and Matador Resources Co (NYSE:MTDR) to get a better sense of its popularity.

If you’d ask most investors, hedge funds are perceived as underperforming, old financial vehicles of the past. While there are over 8000 funds trading at present, our experts look at the moguls of this club, about 700 funds. These hedge fund managers shepherd the majority of the hedge fund industry’s total capital, and by observing their inimitable picks, Insider Monkey has found several investment strategies that have historically outrun the market. Insider Monkey’s small-cap hedge fund strategy outstripped the S&P 500 index by 12 percentage points per year for a decade in their back tests.

Now, let’s take a glance at the latest action surrounding Silicon Laboratories (NASDAQ:SLAB).

What does the smart money think about Silicon Laboratories (NASDAQ:SLAB)?

At the end of the third quarter, a total of 8 of the hedge funds tracked by Insider Monkey were long this stock, a drop of 43% from the second quarter. With hedgies’ sentiment swirling, there exists a few key hedge fund managers who were boosting their stakes meaningfully (or already accumulated large positions).

According to publicly available hedge fund and institutional investor holdings data compiled by Insider Monkey, Clint Carlson’s Carlson Capital has the largest position in Silicon Laboratories (NASDAQ:SLAB), worth close to $16.6 million, accounting for 0.2% of its total 13F portfolio. The second most bullish fund manager is Arrowstreet Capital, managed by Peter Rathjens, Bruce Clarke and John Campbell, which holds an $8.8 million position; the fund has less than 0.1% of its 13F portfolio invested in the stock. Some other members of the smart money that hold long positions consist of D E Shaw, and Peter Muller’s PDT Partners.

Seeing as Silicon Laboratories (NASDAQ:SLAB) has faced a bearish sentiment from the entirety of the hedge funds we track, it’s easy to see that there was a specific group of funds that slashed their full holdings in the third quarter. Interestingly, Brian Ashford-Russell and Tim Woolley’s Polar Capital said goodbye to the biggest position of the 700 funds tracked by Insider Monkey, comprising about $6.2 million in call options., and Christopher Zepf and Brian Thonn’s Kingdom Ridge Capital was right behind this move, as the fund said goodbye to about $5.4 million worth of shares. These moves are intriguing to say the least, as total hedge fund interest fell by 6 funds in the third quarter.

Let’s also examine hedge fund activity in other stocks – not necessarily in the same industry as Silicon Laboratories (NASDAQ:SLAB) but similarly valued. We will take a look at CVB Financial Corp. (NASDAQ:CVBF), Selective Insurance Group (NASDAQ:SIGI), Matador Resources Co (NYSE:MTDR), and Delek US Holdings, Inc. (NYSE:DK). This group of stocks’ market values are closest to Silicon Laboratories (NASDAQ:SLAB)’s market value.

As you can see, these stocks had an average of 16 hedge funds with bullish positions and the average amount invested in these stocks was $153 million. That figure was $34 million in Silicon Laboratories (NASDAQ:SLAB)’s case. Delek US Holdings, Inc. (NYSE:DK) is the most popular stock in this table. On the other hand, CVB Financial Corp. (NASDAQ:CVBF) is the least popular one with only 5 bullish hedge fund positions. Silicon Laboratories (NASDAQ:SLAB) is not the least popular stock in this group, but hedge fund interest is still below average. This is a slightly negative signal and we’d rather spend our time researching stocks that hedge funds are piling on. In this regard, Delek US Holdings, Inc. (NYSE:DK) might be a better candidate to consider a long position.