Legendary investors such as Leon Cooperman and Seth Klarman earn enormous amounts of money for themselves and their investors by doing in-depth research on small-cap stocks that big brokerage houses don’t publish. Small cap stocks -especially when they are screened well- can generate substantial outperformance versus a boring index fund. That’s why we analyze the activity of those successful funds in these small-cap stocks. In the following paragraphs, we analyze Inphi Corporation (NYSE:IPHI) from the perspective of those successful funds.
Inphi Corporation (NYSE:IPHI) investors should be aware of an increase in activity from the world’s largest hedge funds lately. IPHI was in 32 hedge funds’ portfolios at the end of September. There were 25 hedge funds in our database with IPHI positions at the end of the previous quarter. At the end of this article we will also compare IPHI to other stocks including HNI Corp (NYSE:HNI), Controladora Vuela Co Avcn SA CV (ADR) (NYSE:VLRS), and Luxoft Holding Inc (NYSE:LXFT) to get a better sense of its popularity.
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At Insider Monkey, we’ve developed an investment strategy that has delivered market-beating returns over the past 12 months. Our strategy identifies the 100 best-performing funds of the previous quarter from among the collection of 700+ successful funds that we track in our database, which we accomplish using our returns methodology. We then study the portfolios of those 100 funds using the latest 13F data to uncover the 30 most popular mid-cap stocks (market caps of between $1 billion and $10 billion) among them to hold until the next filing period. This strategy delivered 18% gains over the past 12 months, more than doubling the 8% returns enjoyed by the S&P 500 ETFs.
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With all of this in mind, let’s take a gander at the key action regarding Inphi Corporation (NYSE:IPHI).
How are hedge funds trading Inphi Corporation (NYSE:IPHI)?
At the end of the third quarter, a total of 32 of the hedge funds tracked by Insider Monkey were long this stock, a jump of 28% from one quarter earlier. By comparison, 27 hedge funds held shares or bullish call options in IPHI heading into this year. With the smart money’s sentiment swirling, there exists an “upper tier” of key hedge fund managers who were upping their stakes substantially (or already accumulated large positions).
According to Insider Monkey’s hedge fund database, Leon Shaulov’s Maplelane Capital has the most valuable position in Inphi Corporation (NYSE:IPHI), worth close to $65.2 million, comprising 1.7% of its total 13F portfolio. The second most bullish fund manager is Jim Simons’ Renaissance Technologies holding a $29 million position; the fund has 0.1% of its 13F portfolio invested in the stock. Other peers that are bullish contain Doug Gordon, Jon Hilsabeck and Don Jabro’s Shellback Capital, Principal Global Investors’s Columbus Circle Investors and Richard Driehaus’s Driehaus Capital. We should note that Maplelane Capital is among our list of the 100 best performing hedge funds which is based on the performance of their 13F long positions in non-microcap stocks.
As aggregate interest increased, key hedge funds have jumped into Inphi Corporation (NYSE:IPHI) headfirst. Sandler Capital Management, led by Andrew Sandler, created the largest position in Inphi Corporation (NYSE:IPHI). According to its latest 13F filing, the fund had $10.1 million invested in the company at the end of the quarter. Sheetal Duggal’s Thrax Management also made a $6.2 million investment in the stock during the quarter. The other funds with brand new IPHI positions are Ken Griffin’s Citadel Investment Group, Andrew Sandler’s Sandler Capital Management, and Nick Niell’s Arrowgrass Capital Partners.
Let’s now take a look at hedge fund activity in other stocks – not necessarily in the same industry as Inphi Corporation (NYSE:IPHI) but similarly valued. These stocks are HNI Corp (NYSE:HNI), Controladora Vuela Co Avcn SA CV (ADR) (NYSE:VLRS), Luxoft Holding Inc (NYSE:LXFT), and The Corporate Executive Board Company (NYSE:CEB). This group of stocks’ market valuations are similar to IPHI’s market valuation.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| HNI | 17 | 37072 | 6 |
| VLRS | 14 | 174810 | 3 |
| LXFT | 12 | 58124 | -4 |
| CEB | 12 | 66299 | 1 |
As you can see these stocks had an average of 14 hedge funds with bullish positions and the average amount invested in these stocks was $84 million. That figure was $291 million in IPHI’s case. HNI Corp (NYSE:HNI) is the most popular stock in this table. On the other hand Luxoft Holding Inc (NYSE:LXFT) is the least popular one with only 12 bullish hedge fund positions. Compared to these stocks Inphi Corporation (NYSE:IPHI) is more popular among hedge funds. Considering that hedge funds are fond of this stock in relation to its market cap peers, it may be a good idea to analyze it in detail and potentially include it in your portfolio.
Disclosure: none.
