Was The Smart Money Right About Marvell Technology (MRVL)?

Hedge funds and large money managers usually invest with a focus on the long-term horizon and, therefore, short-lived dips or bumps on the charts usually don’t make them change their opinion towards a company. This time it may be different. The coronavirus pandemic destroyed the high correlations among major industries and asset classes. We are now in a stock pickers market where fundamentals of a stock have more effect on the price than the overall direction of the market. As a result we observe sudden and large changes in hedge fund positions depending on the news flow. Let’s take a look at the hedge fund sentiment towards Marvell Technology, Inc. (NASDAQ:MRVL) to find out whether there were any major changes in hedge funds’ views.

Is Marvell Technology, Inc. (NASDAQ:MRVL) worth your attention right now? Prominent investors were taking a bullish view. The number of long hedge fund positions advanced by 3 recently. Marvell Technology, Inc. (NASDAQ:MRVL) was in 40 hedge funds’ portfolios at the end of December. The all time high for this statistic is 50. Our calculations also showed that MRVL isn’t among the 30 most popular stocks among hedge funds (click for Q4 rankings).

If you’d ask most stock holders, hedge funds are assumed to be unimportant, old financial vehicles of years past. While there are over 8000 funds in operation at present, We hone in on the crème de la crème of this group, about 850 funds. These money managers preside over the majority of all hedge funds’ total capital, and by observing their top stock picks, Insider Monkey has deciphered several investment strategies that have historically outperformed Mr. Market. Insider Monkey’s flagship short hedge fund strategy outperformed the S&P 500 short ETFs by around 20 percentage points a year since its inception in March 2017. Also, our monthly newsletter’s portfolio of long stock picks returned 197% since March 2017 (through March 2021) and beat the S&P 500 Index by 124 percentage points. You can download a sample issue of this newsletter on our website .

Matthew Hulsizer of PEAK6 Capital

At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, lithium mining is one of the fastest growing industries right now, so we are checking out stock pitches like this emerging lithium stock. We go through lists like the 10 best hydrogen fuel cell stocks to pick the next Tesla that will deliver a 10x return. Even though we recommend positions in only a tiny fraction of the companies we analyze, we check out as many stocks as we can. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. You can subscribe to our free daily newsletter on our homepage. Keeping this in mind let’s analyze the recent hedge fund action encompassing Marvell Technology, Inc. (NASDAQ:MRVL).

Do Hedge Funds Think MRVL Is A Good Stock To Buy Now?

At the end of the fourth quarter, a total of 40 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 8% from the previous quarter. The graph below displays the number of hedge funds with bullish position in MRVL over the last 22 quarters. So, let’s find out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

Of the funds tracked by Insider Monkey, Brandon Haley’s Holocene Advisors has the most valuable position in Marvell Technology, Inc. (NASDAQ:MRVL), worth close to $125.6 million, corresponding to 0.8% of its total 13F portfolio. The second most bullish fund manager is Ken Griffin of Citadel Investment Group, with a $86 million position; less than 0.1%% of its 13F portfolio is allocated to the company. Remaining hedge funds and institutional investors that hold long positions include Phill Gross and Robert Atchinson’s Adage Capital Management, Matthew Hulsizer’s PEAK6 Capital Management and Seymour Sy Kaufman and Michael Stark’s Crosslink Capital. In terms of the portfolio weights assigned to each position Totem Point Management allocated the biggest weight to Marvell Technology, Inc. (NASDAQ:MRVL), around 9.81% of its 13F portfolio. Glaxis Capital Management is also relatively very bullish on the stock, dishing out 3.98 percent of its 13F equity portfolio to MRVL.

With a general bullishness amongst the heavyweights, specific money managers have been driving this bullishness. Woodline Partners, managed by Michael Rockefeller and Karl Kroeker, established the most outsized position in Marvell Technology, Inc. (NASDAQ:MRVL). Woodline Partners had $24.5 million invested in the company at the end of the quarter. Carl Tiedemann and Michael Tiedemann’s TIG Advisors also initiated a $20.3 million position during the quarter. The following funds were also among the new MRVL investors: Joe DiMenna’s ZWEIG DIMENNA PARTNERS, Javier Velazquez’s Albar Capital, and Mikal Patel’s Oribel Capital Management.

Let’s check out hedge fund activity in other stocks similar to Marvell Technology, Inc. (NASDAQ:MRVL). We will take a look at HP Inc. (NYSE:HPQ), The Hershey Company (NYSE:HSY), Orange SA (NYSE:ORAN), New Oriental Education & Technology Group Inc. (NYSE:EDU), Seagen Inc. (NASDAQ:SGEN), SBA Communications Corporation (NASDAQ:SBAC), and Royalty Pharma Plc (NASDAQ:RPRX). This group of stocks’ market values are closest to MRVL’s market value.

View table here if you experience formatting issues.

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 $2682 million. That figure was $556 million in MRVL’s case. New Oriental Education & Technology Group Inc. (NYSE:EDU) is the most popular stock in this table. On the other hand Orange SA (NYSE:ORAN) is the least popular one with only 3 bullish hedge fund positions. Marvell Technology, Inc. (NASDAQ:MRVL) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for MRVL is 78.3. Stocks with higher number of hedge fund positions relative to other stocks as well as relative to their historical range receive a higher sentiment score. This is a slightly positive signal but we’d rather spend our time researching stocks that hedge funds are piling on. Our calculations showed that top 10 most popular stocks among hedge funds returned 90.7% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 35 percentage points. These stocks gained 13.6% in 2021 through April 30th and beat the market again by 1.6 percentage points. Unfortunately MRVL wasn’t nearly as popular as these 10 stocks and hedge funds that were betting on MRVL were disappointed as the stock returned -4.8% since the end of December (through 4/30) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 10 most popular stocks among hedge funds as many of these stocks already outperformed the market since 2019.

Disclosure: None. This article was originally published at Insider Monkey.