Micron Technology, Inc. (NASDAQ:MU)’s stock has started to show signs of strength after getting battered of late due to an oversupply in DRAM and NAND. Shares of the Idaho-based semiconductor company have lost nearly 70% of their value since hitting their peak in 2014. But Micron has high hopes for its NAND business. Analysts predict an impending increase in the demand of NAND and SSDs, which would bode well for Micron. The company recently partnered with Intel Corporation (NASDAQ:INTC) to make 3D XPoint, an innovative non-volatile memory, like NAND. Some reports also point towards an upcoming surge in DRAM demand, which could revitalize Micron’s core revenue stream. Micron is up by 3.62% today.
How do you pick the next stock to invest in? One way would be to spend hours of research browsing through thousands of publicly traded companies. However, an easier way is to look at the stocks that smart money investors are collectively bullish on. Hedge funds and other institutional investors usually invest large amounts of capital and have to conduct due diligence while choosing their next pick. They don’t always get it right, but, on average, their stock picks historically generated strong returns after adjusting for known risk factors (see the details here). With this in mind, let’s take a look at the recent hedge fund activity surrounding Micron Technology, Inc. (NASDAQ:MU).
Micron Technology, Inc. (NASDAQ:MU) was in 51 hedge funds’ portfolios at the end of March. MU shareholders have witnessed a decrease in support from the world’s most elite money managers in recent months. There were 64 hedge funds in our database with MU positions at the end of the previous quarter. At the end of this article we will also compare MU to other stocks including Cenovus Energy Inc (USA) (NYSE:CVE), NetEase, Inc (ADR) (NASDAQ:NTES), and Cincinnati Financial Corporation (NASDAQ:CINF) to get a better sense of its popularity.
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When looking at the institutional investors followed by Insider Monkey, D E Shaw, managed by D. E. Shaw, holds the number one position in Micron Technology, Inc. (NASDAQ:MU). D E Shaw has a $137.2 million position in the stock, comprising 0.2% of its 13F portfolio. Coming in second is Arrowstreet Capital, managed by Peter Rathjens, Bruce Clarke and John Campbell, which holds a $117.4 million position; the fund has 0.5% of its 13F portfolio invested in the stock. Some other hedge funds and institutional investors that are bullish include Ken Griffin’s Citadel Investment Group, Cliff Asness’ AQR Capital Management, and John Overdeck and David Siegel’s Two Sigma Advisors.
On the next page we’ll look at some funds that sold off positions in Micron during Q1, as well as compare the stock to a handful of others with similar market caps.
Because Micron Technology, Inc. (NASDAQ:MU) has faced bearish sentiment from the smart money, logic holds that there exists a select few hedgies who sold off their entire stakes last quarter. At the top of the heap, David Cohen and Harold Levy’s Iridian Asset Management sold off the biggest position of the 760 funds tracked by Insider Monkey, worth about $161.8 million in stock. Ken Griffin’s fund, Citadel Investment Group, also cut its stock, about $149.9 million worth. These moves are intriguing to say the least, as aggregate hedge fund interest dropped by 13 funds last quarter.
Let’s now take a look at hedge fund activity in other stocks similar to Micron Technology, Inc. (NASDAQ:MU). These stocks are Cenovus Energy Inc (USA) (NYSE:CVE), NetEase, Inc (ADR) (NASDAQ:NTES), Cincinnati Financial Corporation (NASDAQ:CINF), and XL Group plc (NYSE:XL). This group of stocks’ market values resemble MU’s market value.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| CVE | 18 | 645588 | -2 |
| NTES | 31 | 2274907 | 6 |
| CINF | 17 | 435236 | 3 |
| XL | 24 | 811329 | 0 |
As you can see these stocks had an average of 23 hedge funds with bullish positions and the average amount invested in these stocks was $1.04 billion. That figure was $801 million in MU’s case. NetEase, Inc (ADR) (NASDAQ:NTES) is the most popular stock in this table. On the other hand Cincinnati Financial Corporation (NASDAQ:CINF) is the least popular one with only 17 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.
Disclosure: None
