Is Micron Technology, Inc. (MU) Going to Burn These Hedge Funds?

It seems that the masses and most of the financial media hate hedge funds and what they do, but why is this hatred of hedge funds so prominent? At the end of the day, these asset management firms do not gamble the hard-earned money of the people who are on the edge of poverty. Truth be told, most hedge fund managers and other smaller players within this industry are very smart and skilled investors. Of course, they may also make wrong bets in some instances, but no one knows what the future holds and how market participants will react to the bountiful news that floods in each day. The S&P 500 Index gained 5.2% in the 12 month-period that ended October 30, while less than 49% of its stocks beat the benchmark. In contrast, the 30 most popular S&P 500 stocks among the hedge fund investors tracked by the Insider Monkey team returned 9.5% over the same period, which provides evidence that these money managers do have great stock picking abilities. Even more to that, 63% of these stocks managed to beat the S&P 500 Index. That’s why we believe it isn’t a waste of time to check out hedge fund sentiment before you invest in a stock like Micron Technology, Inc. (NASDAQ:MU).

Micron Technology, Inc. (NASDAQ:MU) shareholders have witnessed a decrease in enthusiasm from the smart money in recent months. At the end of this article, we will also compare Micron Technology, Inc. (NASDAQ:MU) to other stocks including Interactive Brokers Group, Inc. (NASDAQ:IBKR), Skyworks Solutions Inc (NASDAQ:SWKS), and Eversource Energy (NYSE:ES) to get a better sense of its popularity.

Today, there are a lot of gauges market participants put to use to size up stocks. A duo of the less utilized gauges are hedge fund and insider trading moves. Our experts have shown that, historically, those who follow the best picks of the elite money managers can beat the S&P 500 by a very impressive amount (see the details here).

Now, we’re going to view the latest action encompassing Micron Technology, Inc. (NASDAQ:MU).

What does the smart money think about Micron Technology, Inc. (NASDAQ:MU)?

At the end of the third quarter, a total of 71 of the hedge funds tracked by Insider Monkey were bullish on this stock, a decline of 10% from the previous quarter. With hedgies’ sentiment swirling, there exists a select group of notable hedge fund managers who were upping their stakes significantly (or already accumulated large positions).

According to publicly available hedge fund and institutional investor holdings data compiled by Insider Monkey, D E Shaw holds the biggest position in Micron Technology, Inc. (NASDAQ:MU). D E Shaw has a $186 million position in the stock, comprising 0.3% of its 13F portfolio. The second largest stake is held by Greenlight Capital, led by David Einhorn, holding a $185.3 million position; 3.1% of its 13F portfolio is allocated to the company. Hedge funds and other institutional investors that hold long positions include David Cohen and Harold Levy’s Iridian Asset Management, Curtis Macnguyen’s Ivory Capital (Investment Mgmt), and David Harding’s Winton Capital Management.

Judging by the fact that Micron Technology, Inc. (NASDAQ:MU) has faced a declination in interest from the aggregate hedge fund industry, it’s easy to see that there is a sect of funds who were dropping their positions entirely heading into Q4. Interestingly, John Lykouretzos’ Hoplite Capital Management said goodbye to the largest stake of the 700 funds monitored by Insider Monkey, comprising close to $69.6 million in stock. Anthony Bozza’s fund, Lakewood Capital Management, also cut its stock, about $56.6 million worth. These bearish behaviors are important to note, as total hedge fund interest was cut by 8 funds heading into Q4.

Let’s also examine hedge fund activity in other stocks similar to Micron Technology, Inc. (NASDAQ:MU). These stocks are Interactive Brokers Group, Inc. (NASDAQ:IBKR), Skyworks Solutions Inc (NASDAQ:SWKS), Eversource Energy (NYSE:ES), and Omnicom Group Inc. (NYSE:OMC). This group of stocks’ market valuations is closest to Micron Technology, Inc. (NASDAQ:MU)’s market valuation.

As you can see, these stocks had an average of 28 hedge funds with bullish positions and the average amount invested in these stocks was $818 million. That figure was $1.87 billion in Micron Technology, Inc. (NASDAQ:MU)’s case. Interactive Brokers Group, Inc. (NASDAQ:IBKR) is the most popular stock in this table. On the other hand, EnergySolutions, Inc. (NYSE:ES) is the least popular one with only 13 bullish hedge fund positions. Compared to these stocks, Micron Technology, Inc. (NASDAQ:MU) 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.