The third quarter was a rough one for most investors, as fears of an interest rate hike in the U.S, a weakening economy in China, and a stagnant Europe, weighed heavily on the minds of investors. Both the S&P 500 and Russell 2000 sank as a result, with the Russell 2000, which is composed of smaller companies, being hit especially hard. This was primarily due to hedge funds, which are big supporters of small-cap stocks, pulling some of their capital out of the volatile markets during this time. Let’s look at how this market volatility affected the sentiment of hedge funds towards Altera Corporation (NASDAQ:ALTR), and what that likely means for the prospects of the company and its stock.
Hedge fund interest in Altera Corporation (NASDAQ:ALTR) shares was flat at the end of last quarter. This is usually a negative indicator. The level and the change in hedge fund popularity aren’t the only variables you need to analyze to decipher hedge funds’ perspectives. A stock may witness a boost in popularity but it may still be less popular than similarly priced stocks. That’s why at the end of this article we will examine companies such as Dr Pepper Snapple Group Inc. (NYSE:DPS), BRF Brasil Foods SA (ADR) (NYSE:BRFS), and Grupo Televisa SAB (ADR) (NYSE:TV) to gather more data points.
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If you’d ask most stock holders, hedge funds are assumed to be unimportant, old investment tools of years past. While there are greater than 8000 funds with their doors open at the moment, We choose to focus on the top tier of this club, about 700 funds. These hedge fund managers oversee most of all hedge funds’ total asset base, and by shadowing their highest performing equity investments, Insider Monkey has uncovered numerous investment strategies that have historically beaten Mr. Market. Insider Monkey’s small-cap hedge fund strategy outrun the S&P 500 index by 12 percentage points a year for a decade in their back tests.
With all of this in mind, let’s view the fresh action surrounding Altera Corporation (NASDAQ:ALTR).
What does the smart money think about Altera Corporation (NASDAQ:ALTR)?
Of the funds tracked by Insider Monkey, Pentwater Capital Management, managed by Matthew Halbower, holds the largest position in Altera Corporation (NASDAQ:ALTR). Pentwater Capital Management has a $693.6 million position in the stock, comprising 6.1% of its 13F portfolio. Coming in second is Eagle Capital Management, led by Boykin Curry, holding a $676.7 million position; 3% of its 13F portfolio is allocated to the stock. Some other professional money managers that are bullish contain D. E. Shaw’s D E Shaw, Thomas Steyer’s Farallon Capital and John Paulson’s Paulson & Co.
It’s worth mentioning that David Cohen and Harold Levy’s Iridian Asset Management dropped the largest position of the “upper crust” of funds followed by Insider Monkey, comprising about $34.4 million in stock. John A. Levin’s fund, Levin Capital Strategies, also dropped its stock, about $14.4 million worth. These transactions are interesting, as total hedge fund interest stayed the same (this is a bearish signal in our experience).
Let’s also examine hedge fund activity in other stocks – not necessarily in the same industry as Altera Corporation (NASDAQ:ALTR) but similarly valued. These stocks are Dr Pepper Snapple Group Inc. (NYSE:DPS), BRF Brasil Foods SA (ADR) (NYSE:BRFS), Grupo Televisa SAB (ADR) (NYSE:TV), and Viacom, Inc. (NASDAQ:VIAB). All of these stocks’ market caps match ALTR’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| DPS | 29 | 1710714 | -8 |
| BRFS | 11 | 315092 | -2 |
| TV | 24 | 2001959 | -1 |
| VIAB | 35 | 1266411 | -12 |
As you can see these stocks had an average of 24.75 hedge funds with bullish positions and the average amount invested in these stocks was $1,324 million. That figure was $3,705 million in ALTR’s case. Viacom, Inc. (NASDAQ:VIAB) is the most popular stock in this table. On the other hand BRF Brasil Foods SA (ADR) (NYSE:BRFS) is the least popular one with only 11 bullish hedge fund positions. Compared to these stocks Altera Corporation (NASDAQ:ALTR) 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.
