Where Do Hedge Funds Stand On Ambarella Inc (AMBA)?

The latest 13F reporting period has come and gone, and Insider Monkey is again at the forefront when it comes to making use of this gold mine of data. We have processed the filings of the more than 867 world-class investment firms that we track and now have access to the collective wisdom contained in these filings, which are based on their September 30th holdings, data that is available nowhere else. Should you consider Ambarella Inc (NASDAQ:AMBA) for your portfolio? We’ll look to this invaluable collective wisdom for the answer.

Hedge fund interest in Ambarella Inc (NASDAQ:AMBA) shares was flat at the end of last quarter. This is usually a negative indicator. Our calculations also showed that AMBA isn’t among the 30 most popular stocks among hedge funds (click for Q3 rankings). At the end of this article we will also compare AMBA to other stocks including MSA Safety Incorporated (NYSE:MSA), Hilton Grand Vacations Inc. (NYSE:HGV), and LG Display Co Ltd. (NYSE:LPL) to get a better sense of its popularity.

At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, lithium prices have more than doubled over the past year, so we go through lists like the 10 best EV 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. Now we’re going to take a peek at the recent hedge fund action regarding Ambarella Inc (NASDAQ:AMBA).

Tim Woolley of Polar Capital

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

At the end of September, a total of 37 of the hedge funds tracked by Insider Monkey were long this stock, a change of 0% from the previous quarter. By comparison, 34 hedge funds held shares or bullish call options in AMBA a year ago. With the smart money’s sentiment swirling, there exists an “upper tier” of key hedge fund managers who were increasing their stakes meaningfully (or already accumulated large positions).

The largest stake in Ambarella Inc (NASDAQ:AMBA) was held by Driehaus Capital, which reported holding $89.9 million worth of stock at the end of September. It was followed by Holocene Advisors with a $65.5 million position. Other investors bullish on the company included Polar Capital, Newbrook Capital Advisors, and Maplelane Capital. In terms of the portfolio weights assigned to each position P.A.W. CAPITAL PARTNERS allocated the biggest weight to Ambarella Inc (NASDAQ:AMBA), around 4.85% of its 13F portfolio. Newbrook Capital Advisors is also relatively very bullish on the stock, designating 3.96 percent of its 13F equity portfolio to AMBA.

Seeing as Ambarella Inc (NASDAQ:AMBA) has witnessed a decline in interest from the entirety of the hedge funds we track, we can see that there lies a certain “tier” of funds that elected to cut their positions entirely by the end of the third quarter. At the top of the heap, Michael Rockefeller and KarláKroeker’s Woodline Partners dropped the largest position of all the hedgies monitored by Insider Monkey, totaling an estimated $13 million in stock. Michael Gelband’s fund, ExodusPoint Capital, also sold off its stock, about $4.9 million worth. These bearish behaviors are important to note, as aggregate 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 Ambarella Inc (NASDAQ:AMBA) but similarly valued. We will take a look at MSA Safety Incorporated (NYSE:MSA), Hilton Grand Vacations Inc. (NYSE:HGV), LG Display Co Ltd. (NYSE:LPL), Vir Biotechnology, Inc. (NASDAQ:VIR), Vontier Corporation (NYSE:VNT), The AZEK Company Inc. (NYSE:AZEK), and Watts Water Technologies Inc (NYSE:WTS). All of these stocks’ market caps are similar to AMBA’s market cap.

View table here if you experience formatting issues.

As you can see these stocks had an average of 22.1 hedge funds with bullish positions and the average amount invested in these stocks was $435 million. That figure was $583 million in AMBA’s case. The AZEK Company Inc. (NYSE:AZEK) is the most popular stock in this table. On the other hand LG Display Co Ltd. (NYSE:LPL) is the least popular one with only 9 bullish hedge fund positions. Ambarella Inc (NASDAQ:AMBA) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for AMBA is 83.3. 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. Our calculations showed that top 5 most popular stocks among hedge funds returned 95.8% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 40 percentage points. These stocks gained 28.6% in 2021 through November 30th and still beat the market by 5.6 percentage points. Hedge funds were also right about betting on AMBA as the stock returned 15.3% since the end of Q3 (through 11/30) and outperformed the market. Hedge funds were rewarded for their relative bullishness.

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