Were Hedge Funds Right About Piling Into Micron (MU)?

A whopping number of 13F filings filed with U.S. Securities and Exchange Commission has been processed by Insider Monkey so that individual investors can look at the overall hedge fund sentiment towards the stocks included in their watchlists. These freshly-submitted public filings disclose money managers’ equity positions as of the end of the three-month period that ended December 31st, so let’s proceed with the discussion of the hedge fund sentiment on Micron Technology, Inc. (NASDAQ:MU).

Micron Technology, Inc. (NASDAQ:MU) was in 100 hedge funds’ portfolios at the end of December. The all time high for this statistic was previously 94. This means the bullish number of hedge fund positions in this stock reached a brand new all time high. There were 79 hedge funds in our database with MU positions at the end of the third quarter. Our calculations also showed that MU ranked #21 among the 30 most popular stocks among hedge funds (click for Q4 rankings).

Hedge funds’ reputation as shrewd investors has been tarnished in the last decade as their hedged returns couldn’t keep up with the unhedged returns of the market indices. Our research was able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by more than 124 percentage points since March 2017 (see the details here).

Peter Rathjens of Arrowstreet Capital

At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, the CBD market is growing at a 33% annualized rate, so we are taking a closer look at this under-the-radar hemp stock. We go through lists like the 10 best biotech stocks under $10 to identify the next stock with 10x upside potential. 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 website. Now we’re going to view the latest hedge fund action regarding Micron Technology, Inc. (NASDAQ:MU).

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

At fourth quarter’s end, a total of 100 of the hedge funds tracked by Insider Monkey were long this stock, a change of 27% from the previous quarter. By comparison, 89 hedge funds held shares or bullish call options in MU a year ago. So, let’s find out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

The largest stake in Micron Technology, Inc. (NASDAQ:MU) was held by Arrowstreet Capital, which reported holding $1321.9 million worth of stock at the end of December. It was followed by Appaloosa Management LP with a $601.4 million position. Other investors bullish on the company included Matrix Capital Management, D E Shaw, and Citadel Investment Group. In terms of the portfolio weights assigned to each position Mohnish Pabrai allocated the biggest weight to Micron Technology, Inc. (NASDAQ:MU), around 66.33% of its 13F portfolio. Ariose Capital is also relatively very bullish on the stock, setting aside 24.31 percent of its 13F equity portfolio to MU.

As aggregate interest increased, key hedge funds have been driving this bullishness. Jericho Capital Asset Management, managed by Josh Resnick, initiated the biggest position in Micron Technology, Inc. (NASDAQ:MU). Jericho Capital Asset Management had $119.8 million invested in the company at the end of the quarter. John Overdeck and David Siegel’s Two Sigma Advisors also initiated a $117.8 million position during the quarter. The following funds were also among the new MU investors: Paul Marshall and Ian Wace’s Marshall Wace LLP, Bijan Modanlou, Joseph Bou-Saba, and Jayaveera Kodali’s Alta Park Capital, and Guy Shahar’s DSAM Partners.

Let’s check out hedge fund activity in other stocks – not necessarily in the same industry as Micron Technology, Inc. (NASDAQ:MU) but similarly valued. These stocks are Mondelez International Inc (NASDAQ:MDLZ), Mercadolibre Inc (NASDAQ:MELI), The TJX Companies, Inc. (NYSE:TJX), Anthem Inc (NYSE:ANTM), Snowflake Inc (NYSE:SNOW), S&P Global Inc. (NYSE:SPGI), and Applied Materials, Inc. (NASDAQ:AMAT). This group of stocks’ market values resemble MU’s market value.

View table here if you experience formatting issues.

As you can see these stocks had an average of 65.3 hedge funds with bullish positions and the average amount invested in these stocks was $4863 million. That figure was $8144 million in MU’s case. Mercadolibre Inc (NASDAQ:MELI) is the most popular stock in this table. On the other hand Mondelez International Inc (NASDAQ:MDLZ) is the least popular one with only 50 bullish hedge fund positions. Compared to these stocks Micron Technology, Inc. (NASDAQ:MU) is more popular among hedge funds. Our overall hedge fund sentiment score for MU is 90. 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. Our calculations showed that top 30 most popular stocks among hedge funds returned 81.2% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 26 percentage points. These stocks returned 12.3% in 2021 through April 19th but still managed to beat the market by 0.9 percentage points. Hedge funds were also right about betting on MU as the stock returned 17.6% since the end of December (through 4/19) and outperformed the market by an even larger margin. Hedge funds were clearly right about piling into this stock relative to other stocks with similar market capitalizations.

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

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