Are Advanced Micro Devices (AMDs) a Good Deed to Buy Now?
We know that hedge funds generate strong, risk-adjusted returns over the long term. Therefore, emulating the picks on which they are collectively bullish can be a profitable strategy for retail investors. With billions of dollars in assets, smart investors must perform complex analysis, spend many resources, and use tools that are not always available to the general public. That’s not to say they don’t have occasional colossal losses; they do (like the recent General Electric losses of Peltz). However, it is always a good idea to keep an eye on hedge fund activity. With that in mind, as the current round of 13F filings just ended, let’s take a look at the smart money sentiment towards Advanced Micro Devices, Inc. (NASDAQ:AMD).
Is Advanced Micro Devices, Inc. (NASDAQ:AMD) a good deed to buy now? Smart Money was in an upbeat mood. The number of bullish bets on hedge funds has increased by 20 in recent times. Advanced Micro Devices, Inc. (NASDAQ:AMD) was listed in 71 hedge fund portfolios at the end of the third quarter of 2020. The all-time high in these statistics is 62. This means that the bullish number of hedge fund positions in this stock is currently at its highest level. Our calculations also showed that AMD is not one of the 30 most popular stocks among hedge funds (click for the Q3 leaderboard and watch the video for a quick overview of the top 5 stocks). There were 51 hedge funds in our database with AMD positions at the end of the second quarter.
Video: Watch our video on the 5 most popular hedge fund stocks.
Why are we paying the least attention to hedge fund sentiment? Our research has shown that a select group of hedge funds have outperformed S&P 500 ETFs by 66 percentage points since March 2017 (see details here). We have also been able to identify in advance a select group of hedge funds that will significantly underperform the market. We have been tracking and sharing the list of these stocks since February 2017 and they have lost 13% until November 17th. This is why we believe that hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
Gabriel Plotkin of Melvin Capital Management
At Insider Monkey, we leave no stone unturned when searching for the next great investment idea. For example, we believe that electric vehicles and energy storage are fast becoming giant markets. Tesla’s share price has skyrocketed, but lithium prices are still below their 2019 highs. So let’s check. this lithium stock at present. We go through lists like the 15 best blue chip stocks to buy to choose the best large-cap stocks to buy. Even though we only recommend positions in a tiny fraction of the companies we analyze, we check as many stocks as possible. We read letters from hedge fund investors and listen to market arguments at hedge fund conferences. You can subscribe to our free daily newsletter at our website. Now we’ll look at recent hedge fund action regarding Advanced Micro Devices, Inc. (NASDAQ:AMD).
Hedge fund activity in Advanced Micro Devices, Inc. (NASDAQ: AMD)
At the end of the third quarter, 71 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 39% from the previous quarter. Below you can check out how hedge fund sentiment towards AMD has evolved over the past 21 quarters. So let’s see which hedge funds were among the top stock holders and which hedge funds were making big moves.
Specifically, DE Shaw was the largest shareholder in Advanced Micro Devices, Inc. (NASDAQ: AMD), with a stake worth $ 1,049.9 million reported at the end of September. Lagging behind DE Shaw was Citadel Investment Group, which raised a stake valued at $ 921.5 million. Fisher Asset Management, GQG Partners and Viking Global were also very fond of the stock, becoming one of the firm’s largest hedge fund holders. In terms of portfolio weights assigned to each position Management of totem points assigned the greatest weight to Advanced Micro Devices, Inc. (NASDAQ: AMD), approximately 6.22% of its 13F portfolio. Jericho Capital Asset Management is also relatively very bullish on the stock, allocating 4.41% of its 13F equity portfolio to AMD.
With a general uptrend among the heavyweights, specific fund managers were behind this uptrend. Viking Global, managed by Andreas Halvorsen, has established the most valuable position in Advanced Micro Devices, Inc. (NASDAQ: AMD). Viking Global had invested $ 369 million in the business at the end of the quarter. that of Alex Sacerdote Whale Rock Capital Management also made a $ 201.5 million investment in the stock during the quarter. Other funds with brand new AMD positions are Renaissance Technologies, Melvin Capital Management by Gabriel Plotkin and Daniel Patrick Gibson Sylebra Capital Management.
Let’s look at hedge fund activity in other stocks – not necessarily in the same industry as Advanced Micro Devices, Inc. (NASDAQ: AMD) but of similar value. These stocks are GlaxoSmithKline plc (NYSE:GSK), Sony Corporation (NYSE:END), The Boeing Company (NYSE:BA), ServiceNow Inc (NYSE:NOW), 3M Company (NYSE:MMM), HDFC Bank Limited (NYSE:HDB) and Fidelity National Information Services Inc. (NYSE:FIS). The market valuations of this group of stocks resemble the market valuation of AMD.
[table] Ticker, number of HF with positions, total value of HF positions (x1000), change of HF GSK position, 31.1772408.3 SNE, 26.369841, -2 BA, 43.1702712.4 NOW, 82.5945474, – 4 MMM, 56,1347738,14 HDB, 34,1121313, -8 FIS, 88.7940617, -23 Average, 51.4.2885729, -2.3 [/table]
See the table here if you have formatting problems.
As you can see, these stocks had an average of 51.4 hedge funds with bullish positions and the average amount invested in these stocks was $ 2,886 million. That figure was $ 5,089 million in AMD’s case. Fidelity National Information Services Inc. (NYSE:FIS) is the most popular action in this table. On the other hand, Sony Corporation (NYSE:END) is the least popular with only 26 bullish hedge fund positions. Advanced Micro Devices, Inc. (NASDAQ: AMD) isn’t the most popular stock in this group, but hedge fund interest is still above average. Our overall hedge fund sentiment score for AMD is 76.3. Stocks with a higher number of hedge fund positions relative to other stocks as well as relative to their historical range receive a higher sentiment score. This is a slightly positive signal but we prefer to spend our time researching the stocks on which hedge funds are accumulating. Our calculations have shown that top 20 most popular stocks among hedge funds, returned 41.3% in 2019 and outperformed the S&P 500 ETF (SPY) by 10 percentage points. These stocks gained 30.7% in 2020 through November 27 and again beat the market by 16.1 percentage points. Unfortunately, AMD was not as popular as these 20 stocks and the hedge funds that bet on AMD were disappointed as the stock has returned 6.3% since the end of September (until 11/27) and has underperformed the market. If you want to invest in large cap stocks with huge upside potential, you should check out the top 20 most popular stocks among hedge funds, as many of these stocks have already outperformed the market so far this year.
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Disclosure: none. This article originally appeared on Monkey initiate.