Is IPHI Stock A Buy or Sell?

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 at Insider Monkey have plowed through 887 13F filings that hedge funds and well-known value investors are required to file by the SEC. The 13F filings show the funds’ and investors’ portfolio positions as of December 31st. In this article we look at what those investors think of Inphi Corporation (NASDAQ:IPHI).

Is IPHI stock a buy or sell? Inphi Corporation (NASDAQ:IPHI) shares haven’t seen a lot of action during the second quarter. Overall, hedge fund sentiment was unchanged. The stock was in 34 hedge funds’ portfolios at the end of December. Our calculations also showed that IPHI isn’t among the 30 most popular stocks among hedge funds (click for Q4 rankings). 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 Carlisle Companies, Inc. (NYSE:CSL), Gentex Corporation (NASDAQ:GNTX), and Albertsons Companies, Inc. (NYSE:ACI) to gather more data points.

So, why do we pay attention to hedge fund sentiment before making any investment decisions? Our research has shown that hedge funds’ small-cap stock picks managed to beat the market by double digits annually between 1999 and 2016, but the margin of outperformance has been declining in recent years. Nevertheless, we were still able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by more than 124 percentage points since March 2017 (see the details here).

Alex Litowitz of Magnetar Capital

At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, the House passed a landmark bill decriminalizing marijuana. So, we are checking out this under the radar cannabis stock right now. We go through lists like the 10 best battery stocks to buy to identify the next stock with 10x upside potential. 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 website. Keeping this in mind we’re going to go over the fresh hedge fund action encompassing Inphi Corporation (NASDAQ:IPHI).

Do Hedge Funds Think IPHI Is A Good Stock To Buy Now?

Heading into the first quarter of 2021, a total of 34 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 0% from the previous quarter. On the other hand, there were a total of 31 hedge funds with a bullish position in IPHI a year ago. So, let’s check out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

More specifically, Magnetar Capital was the largest shareholder of Inphi Corporation (NASDAQ:IPHI), with a stake worth $202.7 million reported as of the end of December. Trailing Magnetar Capital was Pentwater Capital Management, which amassed a stake valued at $195.6 million. D E Shaw, Millennium Management, and Balyasny Asset Management were also very fond of the stock, becoming one of the largest hedge fund holders of the company. In terms of the portfolio weights assigned to each position Hunting Hill Global Capital allocated the biggest weight to Inphi Corporation (NASDAQ:IPHI), around 4.99% of its 13F portfolio. Havens Advisors is also relatively very bullish on the stock, earmarking 4.44 percent of its 13F equity portfolio to IPHI.

Judging by the fact that Inphi Corporation (NASDAQ:IPHI) has experienced declining sentiment from the smart money, it’s easy to see that there lies a certain “tier” of hedgies that slashed their full holdings by the end of the fourth quarter. Intriguingly, Andrew Weiss’s Weiss Asset Management dropped the biggest investment of the 750 funds monitored by Insider Monkey, totaling about $47.1 million in stock, Renaissance Technologies was right behind this move, as the fund cut about $32 million worth. These bearish behaviors are important to note, as aggregate hedge fund interest stayed the same (this is a bearish signal in our experience).

Let’s check out hedge fund activity in other stocks similar to Inphi Corporation (NASDAQ:IPHI). These stocks are Carlisle Companies, Inc. (NYSE:CSL), Gentex Corporation (NASDAQ:GNTX), Albertsons Companies, Inc. (NYSE:ACI), SEI Investments Company (NASDAQ:SEIC), Sensata Technologies Holding plc (NYSE:ST), MKS Instruments, Inc. (NASDAQ:MKSI), and Lightspeed POS Inc. (NYSE:LSPD). This group of stocks’ market caps are similar to IPHI’s market cap.

View table here if you experience formatting issues.

As you can see these stocks had an average of 26.7 hedge funds with bullish positions and the average amount invested in these stocks was $945 million. That figure was $1272 million in IPHI’s case. Gentex Corporation (NASDAQ:GNTX) is the most popular stock in this table. On the other hand Carlisle Companies, Inc. (NYSE:CSL) is the least popular one with only 17 bullish hedge fund positions. Inphi Corporation (NASDAQ:IPHI) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for IPHI is 71.9. 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 30 most popular stocks among hedge funds returned 81.2% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 26 percentage points. These stocks gained 7.9% in 2021 through April 1st and beat the market again by 0.4 percentage points. Unfortunately IPHI wasn’t nearly as popular as these 30 stocks and hedge funds that were betting on IPHI were disappointed as the stock returned -22% since the end of December (through 4/1) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 30 most popular stocks among hedge funds as many of these stocks already outperformed the market since 2019.

Disclosure: None. This article was originally published at Insider Monkey.