After institutional investors had submitted their 13F filings with the U.S. Securities and Exchange Commission for the quarter ended June 30, we analyzed the equity portfolios of a pool of over 700 funds. As usual, these investors focused on large-cap companies, which ranked among the most popular. However, these stocks are more efficiently priced and don’t provide a lot of upside for a smaller investor. On the other hand, mid-cap stocks can usually offer more opportunities and, with this in mind, we have compiled a list of five mid-cap tech stocks that attracted the attention of hedge funds during the second quarter.
We pay attention to hedge funds’ moves because our research has shown that hedge funds are extremely talented at picking stocks on the long side of their portfolios. It is true that hedge fund investors have been underperforming the market in recent years. However, this was mainly because hedge funds’ short stock picks lost a ton of money during the bull market that started in March 2009. Hedge fund investors also paid an arm and a leg for the services that they received. We have been tracking the performance of hedge funds’ 15 most popular small-cap stock picks in real time since the end of August 2012. These stocks have returned 123% since then and outperformed the S&P 500 Index by around 65 percentage points (see the details here). That’s why we believe it is important to pay attention to hedge fund sentiment; we also don’t like paying huge fees.
5. Autodesk, Inc. (NASDAQ:ADSK)
Investors with Long Positions (as of June 30): 45
Aggregate Value of Investors’ Holdings (as of June 30): $2.25 Billion
To begin with, let’s have a look at Autodesk, Inc. (NASDAQ:ADSK), a San Rafael, California-based software corporation, in which the number of investors with long positions declined by three during the second quarter, while the aggregate value of their positions slid from $2.52 billion at the end of March. The company recently announced the integration of its 3D printing experience in Windows 10, expanding the application’s possible reach. Moreover, Autodesk, Inc. (NASDAQ:ADSK) is currently making deeper forays into the gaming industry by creating Stingray, a gaming engine and real-time rendering application program. Nevertheless, the company’s return on equity has slumped by 35% on the year to around 3.20% as of April 30, which is not a good sign for the software corporation. Soroban Capital Partners, headed by Eric W. Mandelblatt, is the largest shareholder of Autodesk among the funds we track, holding 10.34 million shares valued at $517.65 million, followed by billionaire Stephen Mandel’s Lone Pine Capital with 6.16 million shares worth $308.41 million as of the end of June.
4. Activision Blizzard, Inc. (NASDAQ:ATVI)
Investors with Long Positions (as of June 30): 46
Aggregate Value of Investors’ Holdings (as of June 30): $1.57 Billion
During the second quarter, the number of hedge funds invested in Activision Blizzard, Inc. (NASDAQ:ATVI), out of the more than 700 tracked by Insider Monkey, went up from 41, while the aggregate investment of these hedge funds surged by more than 50%. Aside from investors that opened positions in the company, several others boosted their stakes during the second quarter. For example, Joel Greenblatt’s Gotham Asset Management surged its stake by 1350% to 2.18 million shares. Activision is a technology company that carries out several activities through its subsidiaries such as Activision, Radical Entertainment, and Blizzard Entertainment. Its stock has advanced by 31.36% since the beginning of the year, amid positive financial results, among other developments. The company’s earnings for the last four quarters managed to trump the estimates by at least $0.04 per share. Activision Blizzard, Inc. (NASDAQ:ATVI) is also amending its business strategy to expand its digital revenue and to extend game life and spurring engagement. The company is also focused on releasing free-to-play games for its online functionality segment. At the end of the second quarter, Millennium Management, managed by billionaire Israel Englander, topped the list of the largest shareholders in our database, owning 8.96 million shares valued at $216.91 million.
3. Lam Research Corporation (NASDAQ:LRCX)
Investors with Long Positions (as of June 30): 48
Aggregate Value of Investors’ Holdings (as of June 30): $3.41 Billion
Let’s now look at Lam Research Corporation (NASDAQ:LRCX), in which the number of hedge funds with long positions declined only by one during the second quarter, while the aggregate value of their positions inched up by 5.64% amid a 16% growth of the stock in the same period. Lam Research Corporation (NASDAQ:LRCX) is a great pick because of its growth expectations, with the 3D NAND sales expected to jump by 28% on the year amid a fast-growing 3D NAND adoption. At the end of the second quarter, Ken Griffin‘s Citadel Investment Group, emerged as the biggest shareholder out of the funds we track, holding a $159.72 million position that contained 1.96 million shares. Other notable shareholders include David Einhorn’s Greenlight Capital and Donald Chiboucis’ Columbus Circle Investors.
2. Western Digital Corp (NASDAQ:WDC)
Investors with Long Positions (as of June 30): 49
Aggregate Value of Investors’ Holdings (as of June 30): $1.43 Billion
Western Digital Corp (NASDAQ:WDC), one of the world’s largest manufacturers of hard disk drive, was also among the favorite mid-cap among hedge funds. However, according to the latest round of 13F filings, the number of investors that were long on the stock declined from 56, while the aggregate value of their stakes slumped from $1.81 billion. Even though, Western Digital Corp (NASDAQ:WDC) remained among hedge funds mid-cap favorites, it performed dismally during the quarter, tumbling by 15.08%. The Irvine, California-based company recently released a 6TB hard drive for performance desktops, which is quite suitable for large data backups and PC gaming. These hard drives have a better performance and a larger cache and can deliver 29.00% faster performance than the 4TB predecessor. At the end of the second quarter, AQR Capital Management, headed by Cliff Asness was the biggest shareholder among the funds we track, holding 2.85 million shares with a value of $223.17 million.
1. SanDisk Corporation (NASDAQ:SNDK)
Investors with Long Positions (as of June 30): 50
Aggregate Value of Investors’ Holdings (as of June 30): $1.33 Billion
Finally, let’s look at SanDisk Corporation (NASDAQ:SNDK), in which the number of bullish investors rose by five during the second quarter, while the aggregate value of their positions remained almost flat on the quarter. The California-based maker of flash memory storage devices recently made a presentation at the 10th Annual Flash Summit, where it detailed its 3D NAND TLC USB drive and 3D NAND MLC client SSD drive. Due to the fact that SanDisk Corporation (NASDAQ:SNDK) currently produces 50% of NAND bits on TLC and that more companies, including Apple Inc. (NASDAQ:AAPL), are embracing this technology, SanDisk is expected to control an even larger share of the market. While the company has been making progress with its long term strategies, its stock has struggled this year, losing 49.25% year to date. At the end of the quarter, Iridian Asset Management, led by David Cohen and Harold Levy, was the biggest shareholder in our database, holding 7.02 million shares valued at $408.54 million.
Disclosure: None
