Hedge Funds Heading for Applied Materials, Inc. (AMAT)’s Exits

The latest 13F reporting period has come and gone, and Insider Monkey is again at the forefront when it comes to making use of this gold mine of data. We have processed the filings of the more than 700 world-class investment firms that we track and now have access to the collective wisdom contained in these filings, which are based on their September 30 holdings, data that is available nowhere else. Should you consider Applied Materials, Inc. (NASDAQ:AMAT) for your portfolio? We’ll look to this invaluable collective wisdom for the answer.

Is Applied Materials, Inc. (NASDAQ:AMAT) a healthy stock for your portfolio? The best stock pickers are taking a bearish view. The number of long hedge fund positions fell by 11 in recent months. 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 Xcel Energy Inc (NYSE:XEL), The Progressive Corporation (NYSE:PGR), and Baxter International Inc. (NYSE:BAX) to gather more data points.

To most investors, hedge funds are perceived as worthless, outdated financial tools of the past. While there are over 8,000 funds in operation today, we choose to focus on the upper echelon of this group, approximately 700 funds. It is estimated that this group of investors oversee the lion’s share of the smart money’s total asset base, and by watching their top stock picks, Insider Monkey has unsheathed many investment strategies that have historically outrun Mr. Market. Insider Monkey’s small-cap hedge fund strategy outrun the S&P 500 index by 12 percentage points annually for a decade in their back tests.

With all of this in mind, let’s take a look at the fresh action encompassing Applied Materials, Inc. (NASDAQ:AMAT).

What have hedge funds been doing with Applied Materials, Inc. (NASDAQ:AMAT)?

Heading into Q4, a total of 54 of the hedge funds tracked by Insider Monkey held long positions in this stock, a 17% dip from one quarter earlier. With hedgies’ capital changing hands, there exists a few key hedge fund managers who were boosting their stakes substantially (or had already accumulated large positions).

According to publicly available hedge fund and institutional investor holdings data compiled by Insider Monkey, Larry Robbins’ Glenview Capital has the most valuable position in Applied Materials, Inc. (NASDAQ:AMAT), worth close to $281.8 million, amounting to 1.4% of its total 13F portfolio. Coming in second is Citadel Investment Group, led by Ken Griffin, holding a $239.5 million position; 0.2% of its 13F portfolio is allocated to the company. Some other members of the smart money with similar optimism include D E Shaw, John A. Levin’s Levin Capital Strategies, and John Overdeck and David Siegel’s Two Sigma Advisors.

Seeing as Applied Materials, Inc. (NASDAQ:AMAT) has experienced declining sentiment from the aggregate hedge fund industry, it’s safe to say that there was a specific group of money managers that elected to cut their entire stakes last quarter. Intriguingly, Curtis Macnguyen’s Ivory Capital (Investment Mgmt) dumped the biggest position of the 700 funds followed by Insider Monkey, comprising a $91.4 million position of call options underlying shares of AMAT, while Matthew Mark’s Jet Capital Investors was right behind this move, as the fund dumped about $43.2 million worth of shares. These moves are interesting, as total hedge fund interest dropped by 11 funds last quarter.

Let’s also examine hedge fund activity in other stocks similar to Applied Materials, Inc. (NASDAQ:AMAT). These stocks are Xcel Energy Inc (NYSE:XEL), The Progressive Corporation (NYSE:PGR), Baxter International Inc. (NYSE:BAX), and T. Rowe Price Group, Inc. (NASDAQ:TROW). This group of stocks’ market caps resemble AMAT’s market cap.

As you can see these stocks had an average of 28.25 hedge funds with bullish positions and the average amount invested in these stocks was $1.67 billion. That figure was slightly lower, $1.60 billion in AMAT’s case. Baxter International Inc. (NYSE:BAX) is the most popular stock in this table. On the other hand Xcel Energy Inc (NYSE:XEL) is the least popular one with only 10 bullish hedge fund positions. Compared to these stocks Applied Materials, Inc. (NASDAQ:AMAT) is more popular among hedge funds, though it has far less money invested in that BAX does. Considering that hedge fund sentiment is falling hard, while rising just as quickly in BAX, that may be the better stock to consider a long position in at this point.