Should You Avoid Linear Technology Corporation (LLTC)?

While the market driven by short-term sentiment influenced by uncertainty regarding the future of the interest rate environment in the US, the low commodity prices and the economic turmoil in China, many smart money investors are keeping their optimism regarding the current bull run, while still hedging many of their long positions. However, as we know, big investors usually buy stocks with strong fundamentals, which is why we believe we can profit from imitating them. In this article, we are going to take a look at the smart money sentiment surrounding Linear Technology Corporation (NASDAQ:LLTC).

Linear Technology Corporation was in 20 hedge funds’ portfolios at the end of September. LLTC investors should be aware of a decrease in enthusiasm from smart money in recent months. There were 29 hedge funds in our database with LLTC holdings at the end of the previous quarter. At the end of this article we will also compare LLTC to other stocks, including Sealed Air Corp (NYSE:SEE), Eastman Chemical Company (NYSE:EMN), and C.H. Robinson Worldwide, Inc. (NASDAQ:CHRW) to get a better sense of its popularity.

At the moment there are numerous methods market participants use to evaluate stocks. A duo of the best methods are hedge fund and insider trading indicators. Our researchers have shown that, historically, those who follow the top picks of the top investment managers can outperform the broader indices by a significant margin (see the details here).

Now, let’s take a look at the new action surrounding Linear Technology Corporation (NASDAQ:LLTC).

What does the smart money think about Linear Technology Corporation (NASDAQ:LLTC)?

At Q3’s end, a total of 20 of the hedge funds tracked by Insider Monkey held long positions in this stock, a drop of 31% from the previous quarter. With hedge funds’ capital changing hands, there exists a few key hedge fund managers who were increasing their holdings meaningfully (or already accumulated large positions).

When looking at the institutional investors followed by Insider Monkey, Generation Investment Management, managed by David Blood and Al Gore, holds the biggest position in Linear Technology Corporation (NASDAQ:LLTC), worth an estimated $498.4 million, comprising 7.2% of its 13F portfolio. The second most bullish fund manager is Renaissance Technologies, run by Jim Simons, which holds a $309.2 million position; the fund has 0.7% of its 13F portfolio invested in the stock. Some other peers with similar optimism contain Steve Cohen’s Point72 Asset Management, David Harding’s Winton Capital Management and Joel Greenblatt’s Gotham Asset Management.

Judging by the fact that Linear Technology Corporation (NASDAQ:LLTC) has faced declining sentiment from hedge fund managers, we can see that there were a few hedge funds that elected to cut their full holdings heading into Q4. Intriguingly, Robert Pohly’s Samlyn Capital dropped the largest position of the “upper crust” of funds monitored by Insider Monkey, worth about $35.4 million in call options.. Leon Shaulov’s fund, Maplelane Capital, also sold off its call options, valued at roughly $17.7 million. These transactions are important to note, as aggregate hedge fund interest was cut by 9 funds heading into Q4.

Let’s check out hedge fund activity in other stocks similar to Linear Technology Corporation (NASDAQ:LLTC). These stocks are Sealed Air Corp (NYSE:SEE), Eastman Chemical Company (NYSE:EMN), C.H. Robinson Worldwide, Inc. (NASDAQ:CHRW), and Autoliv Inc. (NYSE:ALV). All of these stocks’ market caps are closest to LLTC’s market cap.

As you can see these stocks had an average of 31 hedge funds with bullish positions and the average amount invested in these stocks was $1.03 billion. That figure was $1.64 billion in LLTC’s case. Sealed Air Corp (NYSE:SEE) is the most popular stock in this table. On the other hand Autoliv Inc. (NYSE:ALV) is the least popular one with only 12 bullish hedge fund positions. Linear Technology Corporation (NASDAQ:LLTC) 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. In this regard SEE might be a better candidate to consider a long position.