What Do Hedge Funds Think of Broadcom Corporation (BRCM)?

At Insider Monkey we track the activity of some of the best-performing hedge funds like Appaloosa Management, Baupost, and Third Point because we determined that some of the stocks that they are collectively bullish on can help us generate returns above the broader indices. Out of thousands of stocks that hedge funds invest in, small-caps can provide the best returns over the long term due to the fact that these companies are less efficiently priced and are usually under the radars of mass-media, analysts and dumb money. This is why we follow the smart money moves in the small-cap space.

Broadcom Corporation (NASDAQ:BRCM) has seen a decrease in enthusiasm from smart money recently. BRCM was in 67 hedge funds’ portfolios at the end of September. There were 79 hedge funds in our database with BRCM positions at the end of the previous quarter. At the end of this article we will also compare BRCM to other stocks including Travelers Companies Inc (NYSE:TRV), Brookfield Asset Management Inc. (NYSE:BAM), and Sony Corporation (ADR) (NYSE:SNE) to get a better sense of its popularity.

With all of this in mind, let’s go over the new action surrounding Broadcom Corporation (NASDAQ:BRCM).

What does the smart money think about Broadcom Corporation (NASDAQ:BRCM)?

At Q3’s end, a total of 67 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -15% from one quarter earlier. With the smart money’s capital changing hands, there exists a select group of key hedge fund managers who were upping their stakes meaningfully (or already accumulated large positions).

When looking at the institutional investors followed by Insider Monkey, Andreas Halvorsen’s Viking Global has the number one position in Broadcom Corporation (NASDAQ:BRCM), worth close to $1.2122 billion, accounting for 4.6% of its total 13F portfolio. The second most bullish fund manager is Matthew Halbower of Pentwater Capital Management, with a $1.1367 billion position; 10% of its 13F portfolio is allocated to the stock. Remaining peers with similar optimism include Eric W. Mandelblatt’s Soroban Capital Partners, Thomas Steyer’s Farallon Capital and D E Shaw.

Since Broadcom Corporation (NASDAQ:BRCM) has witnessed falling interest from the smart money, we can see that there was a specific group of hedgies that slashed their entire stakes heading into Q4. Interestingly, John Paulson’s Paulson & Co sold off the biggest stake of all the hedgies followed by Insider Monkey, comprising an estimated $216.1 million in stock. Matthew Sidman’s fund, Three Bays Capital, also sold off its stock, about $125.2 million worth. These moves are intriguing to say the least, as aggregate hedge fund interest fell by 12 funds heading into Q4.

Let’s now take a look at hedge fund activity in other stocks – not necessarily in the same industry as Broadcom Corporation (NASDAQ:BRCM) but similarly valued. These stocks are Travelers Companies Inc (NYSE:TRV), Brookfield Asset Management Inc. (NYSE:BAM), Sony Corporation (ADR) (NYSE:SNE), and Anadarko Petroleum Corporation (NYSE:APC). All of these stocks’ market caps are closest to BRCM’s market cap.

As you can see these stocks had an average of 36.5 hedge funds with bullish positions and the average amount invested in these stocks was $1449 million. That figure was $6730 million in BRCM’s case. Anadarko Petroleum Corporation (NYSE:APC) is the most popular stock in this table. On the other hand Sony Corporation (ADR) (NYSE:SNE) is the least popular one with only 21 bullish hedge fund positions. Broadcom Corporation (NASDAQ:BRCM) is not the most popular stock in this group but hedge fund interest is still above average. This is a slightly positive signal but we’d rather spend our time researching stocks that hedge funds are piling on. In this regard APC might be a better candidate to consider a long position.