In this article we will take a look at whether hedge funds think Inphi Corporation (NYSE:IPHI) is a good investment right now. We check hedge fund and billionaire investor sentiment before delving into hours of research. Hedge funds spend millions of dollars on Ivy League graduates, unconventional data sources, expert networks, and get tips from investment bankers and industry insiders. Sure they sometimes fail miserably, but their consensus stock picks historically outperformed the market after adjusting for known risk factors.
Is Inphi Corporation (NYSE:IPHI) a healthy stock for your portfolio? Hedge funds are buying. The number of bullish hedge fund bets inched up by 5 in recent months. Our calculations also showed that IPHI isn’t among the 30 most popular stocks among hedge funds (click for Q1 rankings and see the video for a quick look at the top 5 stocks). IPHI was in 36 hedge funds’ portfolios at the end of March. There were 31 hedge funds in our database with IPHI holdings at the end of the previous quarter.
Video: Watch our video about the top 5 most popular hedge fund stocks.
In the financial world there are tons of gauges market participants employ to assess stocks. A duo of the most underrated gauges are hedge fund and insider trading activity. Our researchers have shown that, historically, those who follow the top picks of the top money managers can outpace the S&P 500 by a superb amount (see the details here).
Richard Driehaus of Driehaus Capital
At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, 2020’s unprecedented market conditions provide us with the highest number of trading opportunities in a decade. So we are checking out trades like this one. We interview hedge fund managers and ask them about their best ideas. If you want to find out the best healthcare stock to buy right now, you can watch our latest hedge fund manager interview here. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. Our best call in 2020 was shorting the market when the S&P 500 was trading at 3150 after realizing the coronavirus pandemic’s significance before most investors. Keeping this in mind let’s take a glance at the latest hedge fund action regarding Inphi Corporation (NYSE:IPHI).
What does smart money think about Inphi Corporation (NYSE:IPHI)?
At the end of the first quarter, a total of 36 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 16% from the fourth quarter of 2019. The graph below displays the number of hedge funds with bullish position in IPHI over the last 18 quarters. So, let’s review which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
The largest stake in Inphi Corporation (NYSE:IPHI) was held by Citadel Investment Group, which reported holding $109 million worth of stock at the end of September. It was followed by Cavalry Asset Management with a $65.3 million position. Other investors bullish on the company included Renaissance Technologies, Driehaus Capital, and D E Shaw. In terms of the portfolio weights assigned to each position Shelter Haven Capital Management allocated the biggest weight to Inphi Corporation (NYSE:IPHI), around 8.75% of its 13F portfolio. Cavalry Asset Management is also relatively very bullish on the stock, dishing out 7.2 percent of its 13F equity portfolio to IPHI.
Now, key money managers have been driving this bullishness. Shelter Haven Capital Management, managed by Jerry Kochanski, created the biggest position in Inphi Corporation (NYSE:IPHI). Shelter Haven Capital Management had $23.1 million invested in the company at the end of the quarter. Steve Cohen’s Point72 Asset Management also made a $14.9 million investment in the stock during the quarter. The following funds were also among the new IPHI investors: Charles Clough’s Clough Capital Partners, Brandon Haley’s Holocene Advisors, and Anand Parekh’s Alyeska Investment Group.
Let’s go over hedge fund activity in other stocks – not necessarily in the same industry as Inphi Corporation (NYSE:IPHI) but similarly valued. We will take a look at Under Armour Inc (NYSE:UA), Primerica, Inc. (NYSE:PRI), Everbridge, Inc. (NASDAQ:EVBG), and Helen of Troy Limited (NASDAQ:HELE). This group of stocks’ market caps are closest to IPHI’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| UA | 37 | 660755 | 5 |
| PRI | 23 | 303962 | -5 |
| EVBG | 31 | 796566 | -6 |
| HELE | 16 | 135725 | -1 |
| Average | 26.75 | 474252 | -1.75 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 26.75 hedge funds with bullish positions and the average amount invested in these stocks was $474 million. That figure was $482 million in IPHI’s case. Under Armour Inc (NYSE:UA) is the most popular stock in this table. On the other hand Helen of Troy Limited (NASDAQ:HELE) is the least popular one with only 16 bullish hedge fund positions. Inphi Corporation (NYSE:IPHI) is not the most popular stock in this group but hedge fund interest is still above average. Our calculations showed that top 10 most popular stocks among hedge funds returned 41.4% in 2019 and outperformed the S&P 500 ETF (SPY) by 10.1 percentage points. These stocks gained 8.3% in 2020 through the end of May but still beat the market by 13.2 percentage points. Hedge funds were also right about betting on IPHI as the stock returned 58.7% in Q2 (through the end of May) 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.
