Although the masses and most of the financial media blame hedge funds for their exorbitant fee structure and disappointing performance, these investors have proved to have great stock picking abilities over the years (that’s why their assets under management continue to swell). We believe hedge fund sentiment should serve as a crucial tool of an individual investor’s stock selection process, as it may offer great insights of how the brightest minds of the finance industry feel about specific stocks. After all, these people have access to the smartest analysts and expensive data/information sources that individual investors can’t match. So should one consider investing in MagnaChip Semiconductor Corporation (NYSE:MX)? The smart money sentiment can provide an answer to this question.
Hedge fund interest in MagnaChip Semiconductor Corporation (NYSE:MX) shares was flat at the end of last quarter. This is usually a negative indicator. Our calculations also showed that MX 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 MX to other stocks including Sohu.com Limited (NASDAQ:SOHU), Immatics N.V. (NASDAQ:IMTX), and Edgewise Therapeutics, Inc. (NASDAQ:EWTX) to get a better sense of its popularity.
Howard Marks of Oaktree Capital
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. With all of this in mind let’s take a look at the new hedge fund action surrounding MagnaChip Semiconductor Corporation (NYSE:MX).
Do Hedge Funds Think MX Is A Good Stock To Buy Now?
At the end of September, a total of 35 of the hedge funds tracked by Insider Monkey were long this stock, a change of 0% from the second quarter of 2021. Below, you can check out the change in hedge fund sentiment towards MX over the last 25 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.
More specifically, Toronado Partners was the largest shareholder of MagnaChip Semiconductor Corporation (NYSE:MX), with a stake worth $36.4 million reported as of the end of September. Trailing Toronado Partners was Oaktree Capital Management, which amassed a stake valued at $35.6 million. Brigade Capital, Water Island Capital, and Millennium Management were also very fond of the stock, becoming one of the largest hedge fund holders of the company. In terms of the portfolio weights assigned to each position Toronado Partners allocated the biggest weight to MagnaChip Semiconductor Corporation (NYSE:MX), around 12.78% of its 13F portfolio. North Run Capital is also relatively very bullish on the stock, designating 3.39 percent of its 13F equity portfolio to MX.
Judging by the fact that MagnaChip Semiconductor Corporation (NYSE:MX) has experienced bearish sentiment from the entirety of the hedge funds we track, we can see that there is a sect of hedgies who were dropping their positions entirely heading into Q4. At the top of the heap, Robert Emil Zoellner’s Alpine Associates sold off the largest investment of all the hedgies monitored by Insider Monkey, totaling an estimated $15.1 million in stock. Douglas Harold Hart Polunin’s fund, Polunin Capital, also said goodbye to its stock, about $5.4 million worth. These bearish behaviors are intriguing to say the least, as aggregate hedge fund interest stayed the same (this is a bearish signal in our experience).
Let’s check out hedge fund activity in other stocks similar to MagnaChip Semiconductor Corporation (NYSE:MX). These stocks are Sohu.com Limited (NASDAQ:SOHU), Immatics N.V. (NASDAQ:IMTX), Edgewise Therapeutics, Inc. (NASDAQ:EWTX), OneBeacon Insurance Group, Ltd. (NYSE:OB), Armada Hoffler Properties Inc (NYSE:AHH), The First Bancshares, Inc. (MS) (NASDAQ:FBMS), and U.S. Auto Parts Network, Inc. (NASDAQ:PRTS). This group of stocks’ market values match MX’s market value.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| SOHU | 14 | 111806 | 2 |
| IMTX | 23 | 234534 | -1 |
| EWTX | 14 | 530164 | -1 |
| OB | 6 | 21435 | 6 |
| AHH | 10 | 47893 | 0 |
| FBMS | 10 | 100734 | 1 |
| PRTS | 22 | 184389 | 0 |
| Average | 14.1 | 175851 | 1 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 14.1 hedge funds with bullish positions and the average amount invested in these stocks was $176 million. That figure was $264 million in MX’s case. Immatics N.V. (NASDAQ:IMTX) is the most popular stock in this table. On the other hand OneBeacon Insurance Group, Ltd. (NYSE:OB) is the least popular one with only 6 bullish hedge fund positions. Compared to these stocks MagnaChip Semiconductor Corporation (NYSE:MX) is more popular among hedge funds. Our overall hedge fund sentiment score for MX is 85. 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. Unfortunately MX wasn’t nearly as popular as these 5 stocks and hedge funds that were betting on MX were disappointed as the stock returned 1.8% since the end of the third quarter (through 11/30) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 5 most popular stocks among hedge funds as most of these stocks already outperformed the market since 2019.
Follow Magnachip Semiconductor Corp (NYSE:MX)
Follow Magnachip Semiconductor Corp (NYSE:MX)
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Disclosure: None. This article was originally published at Insider Monkey.
