Maxim Integrated Products Inc. (MXIM): Are Hedge Funds Right About This Stock?

Billionaire hedge fund managers such as Steve Cohen and Stan Druckenmiller can generate millions or even billions of dollars every year by pinning down high-potential small-cap stocks and pouring cash into these candidates. Small-cap stocks are overlooked by most investors, brokerage houses, and financial services hubs, while the unlimited research abilities of the big players within the hedge fund industry can easily identify the undervalued and high-potential stocks that reside the ignored corners of equity markets. There are numerous small-cap stocks that have turned out to be great winners, which is one of the main reasons the Insider Monkey team pays close attention to the hedge fund activity in relation to these stocks.

Maxim Integrated Products Inc. (NASDAQ:MXIM) shareholders have witnessed a decrease in support from the world’s most elite money managers of late. Maxim Integrated Products Inc. (NASDAQ:MXIM) was in 20 hedge funds’ portfolios at the end of the third quarter of 2015. There were 23 hedge funds in our database with Maxim Integrated Products Inc. (NASDAQ:MXIM) positions at the end of the previous quarter. At the end of this article, we will also compare Maxim Integrated Products Inc. (NASDAQ:MXIM) to other stocks, including Extra Space Storage, Inc. (NYSE:EXR), Cintas Corporation (NASDAQ:CTAS), and Cna Financial Corp (NYSE:CNA) to get a better sense of its popularity.

In the eyes of most shareholders, hedge funds are viewed as worthless, old investment vehicles of yesteryear. While there are more than 8000 funds with their doors open at the moment, We look at the top tier of this club, about 700 funds. Most estimates calculate that this group of people preside over bulk of all hedge funds’ total asset base, and by monitoring their best equity investments, Insider Monkey has formulated various investment strategies that have historically exceeded the S&P 500 index. Insider Monkey’s small-cap hedge fund strategy outperformed the S&P 500 index by 12 percentage points per annum for a decade in their back tests.

Keeping this in mind, let’s take a look at the key action regarding Maxim Integrated Products Inc. (NASDAQ:MXIM).

What have hedge funds been doing with Maxim Integrated Products Inc. (NASDAQ:MXIM)?

At the end of the third quarter, a total of 20 of the hedge funds tracked by Insider Monkey held long positions in this stock, a drop of 13% from one quarter earlier. With hedge funds’ sentiment swirling, there exists an “upper tier” of notable hedge fund managers who were increasing their holdings significantly (or already accumulated large positions).

According to Insider Monkey’s hedge fund database, D E Shaw has the most valuable position in Maxim Integrated Products Inc. (NASDAQ:MXIM), worth close to $175.3 million, amounting to 0.3% of its total 13F portfolio. Sitting at the No. 2 spot is Israel Englander of Millennium Management, with a $80.6 million position; the fund has 0.2% of its 13F portfolio invested in the stock. Remaining peers with similar optimism include Renaissance Technologies, Cliff Asness’ AQR Capital Management, and Joel Greenblatt’s Gotham Asset Management.

Due to the fact that Maxim Integrated Products Inc. (NASDAQ:MXIM) has faced a declination in interest from hedge fund managers, logic holds that there was a specific group of fund managers that slashed their positions entirely by the end of the third quarter. It’s worth mentioning that Benjamin A. Smith’s Laurion Capital Management dumped the biggest stake of the “upper crust” of funds monitored by Insider Monkey, worth an estimated $35.4 million in call options., and Daniel S. Och’s OZ Management was right behind this move, as the fund dropped about $10.5 million worth of shares. These bearish behaviors are important to note, as total hedge fund interest fell by 3 funds by the end of the third quarter.

Let’s check out hedge fund activity in other stocks similar to Maxim Integrated Products Inc. (NASDAQ:MXIM). These stocks are Extra Space Storage, Inc. (NYSE:EXR), Cintas Corporation (NASDAQ:CTAS), Cna Financial Corp (NYSE:CNA), and Federal Realty Investment Trust (NYSE:FRT). This group of stocks’ market valuations is similar to Maxim Integrated Products Inc. (NASDAQ:MXIM)’s market valuation.

As you can see, these stocks had an average of 17 hedge funds with bullish positions and the average amount invested in these stocks was $380 million. That figure was $456 million in Maxim Integrated Products Inc. (NASDAQ:MXIM)’s case. Cintas Corporation (NASDAQ:CTAS) is the most popular stock in this table. On the other hand, Cna Financial Corp (NYSE:CNA) is the least popular one with only 11 bullish hedge fund positions. Maxim Integrated Products Inc. (NASDAQ:MXIM) is not the most popular stock in this group, but hedge fund interest is still above average. This is a slightly positive signal, but we’d rather spend our time researching stocks that hedge funds are piling on. In this regard, Cintas Corporation (NASDAQ:CTAS) might be a better candidate to consider a long position.