World-class money managers like Ken Griffin and Barry Rosenstein only invest their wealthy clients’ money after undertaking a rigorous examination of any potential stock. They are particularly successful in this regard when it comes to small-cap stocks, which their peerless research gives them a big information advantage on when it comes to judging their worth. It’s not surprising then that they generate their biggest returns from these stocks and invest more of their money in these stocks on average than other investors. It’s also not surprising then that we pay close attention to these picks ourselves and have built a market-beating investment strategy around them.
MaxLinear, Inc. (NYSE:MXL) was in 7 hedge funds’ portfolios at the end of the second quarter of 2019. MXL has seen an increase in activity from the world’s largest hedge funds recently. There were 6 hedge funds in our database with MXL positions at the end of the previous quarter. Our calculations also showed that MXL isn’t among the 30 most popular stocks among hedge funds (see the video below).
Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.
In the financial world there are a large number of tools investors have at their disposal to grade stocks. A pair of the most under-the-radar tools are hedge fund and insider trading indicators. We have shown that, historically, those who follow the top picks of the best fund managers can outperform the broader indices by a solid amount. Insider Monkey’s flagship best performing hedge funds strategy returned 25.8% year to date (through May 30th) and outperformed the market even though it draws its stock picks among small-cap stocks. This strategy also outperformed the market by 40 percentage points since its inception (see the details here). That’s why we believe hedge fund sentiment is a useful indicator that investors should pay attention to.
Unlike former hedge manager, Dr. Steve Sjuggerud, who is convinced Dow will soar past 40000, our long-short investment strategy doesn’t rely on bull markets to deliver double digit returns. We only rely on hedge fund buy/sell signals. Let’s check out the fresh hedge fund action regarding MaxLinear, Inc. (NYSE:MXL).
What does smart money think about MaxLinear, Inc. (NYSE:MXL)?
At the end of the second quarter, a total of 7 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 17% from the previous quarter. Below, you can check out the change in hedge fund sentiment towards MXL over the last 16 quarters. With hedge funds’ sentiment swirling, there exists a select group of noteworthy hedge fund managers who were increasing their holdings significantly (or already accumulated large positions).
The largest stake in MaxLinear, Inc. (NYSE:MXL) was held by Tairen Capital, which reported holding $8.9 million worth of stock at the end of March. It was followed by Divisar Capital with a $6.6 million position. Other investors bullish on the company included Millennium Management, Balyasny Asset Management, and Citadel Investment Group.
Consequently, specific money managers were breaking ground themselves. Balyasny Asset Management, managed by Dmitry Balyasny, initiated the most outsized position in MaxLinear, Inc. (NYSE:MXL). Balyasny Asset Management had $1 million invested in the company at the end of the quarter. Ken Griffin’s Citadel Investment Group also made a $0.6 million investment in the stock during the quarter. The only other fund with a brand new MXL position is Steve Cohen’s Point72 Asset Management.
Let’s also examine hedge fund activity in other stocks – not necessarily in the same industry as MaxLinear, Inc. (NYSE:MXL) but similarly valued. We will take a look at Badger Meter, Inc. (NYSE:BMI), QEP Resources Inc (NYSE:QEP), Usa Compression Partners LP (NYSE:USAC), and Forward Air Corporation (NASDAQ:FWRD). All of these stocks’ market caps are closest to MXL’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| BMI | 12 | 114305 | -2 |
| QEP | 18 | 256247 | -5 |
| USAC | 3 | 1019 | -2 |
| FWRD | 18 | 102012 | 3 |
| Average | 12.75 | 118396 | -1.5 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 12.75 hedge funds with bullish positions and the average amount invested in these stocks was $118 million. That figure was $19 million in MXL’s case. QEP Resources Inc (NYSE:QEP) is the most popular stock in this table. On the other hand Usa Compression Partners LP (NYSE:USAC) is the least popular one with only 3 bullish hedge fund positions. MaxLinear, Inc. (NYSE:MXL) is not the least popular stock in this group but hedge fund interest is still below average. This is a slightly negative signal and we’d rather spend our time researching stocks that hedge funds are piling on. Our calculations showed that top 20 most popular stocks among hedge funds returned 24.4% in 2019 through September 30th and outperformed the S&P 500 ETF (SPY) by 4 percentage points. Unfortunately MXL wasn’t nearly as popular as these 20 stocks (hedge fund sentiment was quite bearish); MXL investors were disappointed as the stock returned -4.5% during the third quarter and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 20 most popular stocks among hedge funds as many of these stocks already outperformed the market so far in 2019.
Disclosure: None. This article was originally published at Insider Monkey.
