While the market driven by short-term sentiment influenced by the accommodative interest rate environment in the US, virus news and stimulus spending, many smart money investors are starting to get cautious towards the current bull run since March, 2020 and hedging or reducing many of their long positions. Some fund managers are betting on Dow hitting 40,000 to generate strong returns. However, as we know, big investors usually buy stocks with strong fundamentals that can deliver gains both in bull and bear markets, which is why we believe we can profit from imitating them. In this article, we are going to take a look at the smart money sentiment surrounding MACOM Technology Solutions Holdings Inc (NASDAQ:MTSI).
MACOM Technology Solutions Holdings Inc (NASDAQ:MTSI) was in 30 hedge funds’ portfolios at the end of the first quarter of 2021. The all time high for this statistic was previously 28. This means the bullish number of hedge fund positions in this stock currently sits at its all time high. MTSI has experienced an increase in activity from the world’s largest hedge funds recently. There were 24 hedge funds in our database with MTSI positions at the end of the fourth quarter. Our calculations also showed that MTSI isn’t among the 30 most popular stocks among hedge funds (click for Q1 rankings).
Hedge funds’ reputation as shrewd investors has been tarnished in the last decade as their hedged returns couldn’t keep up with the unhedged returns of the market indices. Hedge funds have more than $3.5 trillion in assets under management, so you can’t expect their entire portfolios to beat the market by large margins. Our research was able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by more than 115 percentage points since March 2017 (see the details here). So you can still find a lot of gems by following hedge funds’ moves today.
Peter Rathjens of Arrowstreet Capital
At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, lithium mining is one of the fastest growing industries right now, so we are checking out stock pitches like this emerging lithium stock. 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. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. You can subscribe to our free daily newsletter on our homepage. Keeping this in mind let’s go over the latest hedge fund action regarding MACOM Technology Solutions Holdings Inc (NASDAQ:MTSI).
Do Hedge Funds Think MTSI Is A Good Stock To Buy Now?
At Q1’s end, a total of 30 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 25% from the previous quarter. Below, you can check out the change in hedge fund sentiment towards MTSI over the last 23 quarters. So, let’s find out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
The largest stake in MACOM Technology Solutions Holdings Inc (NASDAQ:MTSI) was held by D E Shaw, which reported holding $82.8 million worth of stock at the end of December. It was followed by Schonfeld Strategic Advisors with a $14.7 million position. Other investors bullish on the company included Shelter Haven Capital Management, Renaissance Technologies, and Arrowstreet Capital. In terms of the portfolio weights assigned to each position Shelter Haven Capital Management allocated the biggest weight to MACOM Technology Solutions Holdings Inc (NASDAQ:MTSI), around 4.13% of its 13F portfolio. Provenire Capital is also relatively very bullish on the stock, setting aside 3.37 percent of its 13F equity portfolio to MTSI.
As aggregate interest increased, specific money managers have jumped into MACOM Technology Solutions Holdings Inc (NASDAQ:MTSI) headfirst. Shelter Haven Capital Management, managed by Jerry Kochanski, created the largest position in MACOM Technology Solutions Holdings Inc (NASDAQ:MTSI). Shelter Haven Capital Management had $13.1 million invested in the company at the end of the quarter. Ira Unschuld’s Brant Point Investment Management also made a $7 million investment in the stock during the quarter. The other funds with brand new MTSI positions are Richard SchimeláandáLawrence Sapanski’s Cinctive Capital Management, Ira Unschuld’s Brant Point Investment Management, and Dmitry Balyasny’s Balyasny Asset Management.
Let’s go over hedge fund activity in other stocks – not necessarily in the same industry as MACOM Technology Solutions Holdings Inc (NASDAQ:MTSI) but similarly valued. These stocks are W.R. Grace & Co. (NYSE:GRA), BigCommerce Holdings, Inc. (NASDAQ:BIGC), H&R Block, Inc. (NYSE:HRB), Atotech Limited (NYSE:ATC), Goosehead Insurance, Inc. (NASDAQ:GSHD), The Brink’s Company (NYSE:BCO), and Southwest Gas Holdings, Inc. (NYSE:SWX). This group of stocks’ market caps are closest to MTSI’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| GRA | 43 | 1434037 | 3 |
| BIGC | 26 | 505108 | 0 |
| HRB | 27 | 228558 | 4 |
| ATC | 17 | 69894 | 17 |
| GSHD | 24 | 162339 | 3 |
| BCO | 24 | 406832 | -2 |
| SWX | 23 | 159735 | 6 |
| Average | 26.3 | 423786 | 4.4 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 26.3 hedge funds with bullish positions and the average amount invested in these stocks was $424 million. That figure was $201 million in MTSI’s case. W.R. Grace & Co. (NYSE:GRA) is the most popular stock in this table. On the other hand Atotech Limited (NYSE:ATC) is the least popular one with only 17 bullish hedge fund positions. MACOM Technology Solutions Holdings Inc (NASDAQ:MTSI) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for MTSI is 65. 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. This is a slightly positive signal but we’d rather spend our time researching stocks that hedge funds are piling on. 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 22.8% in 2021 through July 2nd and beat the market again by 6 percentage points. Unfortunately MTSI wasn’t nearly as popular as these 5 stocks and hedge funds that were betting on MTSI were disappointed as the stock returned 7.8% since the end of March (through 7/2) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 5 most popular stocks among hedge funds as many of these stocks already outperformed the market since 2019.
Follow Macom Technology Solutions Holdings Inc. (NASDAQ:MTSI)
Follow Macom Technology Solutions Holdings Inc. (NASDAQ:MTSI)
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Disclosure: None. This article was originally published at Insider Monkey.
