Semiconductor Stocks Click With Hedge Funds

by: Insider Monkey

Last year wasn’t kind to most of the semiconductor stocks. The 10 stocks we listed below lost an average 9.5% during 2011, vs. 2.1% total return for the S&P 500 index. These stocks underperformed the market by a large margin but hedge funds’ top stock pick in this industry actually returned nearly 20% in 2011. Our research has shown that hedge funds’ top stock picks outperformed the market on the average over the past decade. Below we reviewed hedge fund investments in 10 semiconductor stocks. This analysis is based on the transactions of more than 350 hedge funds compiled by Insider Monkey. Here are the top 10 large-cap semiconductor stocks held by hedge funds:



No. of hedge fund

Intel Corp



Applied Materials, Inc.



Avago Technologies Ltd.



Broadcom Corporation



Micron Technology, Inc.



Altera Corporation



Analog Devices, Inc.



Texas Instruments Inc.



Marvell Technology Group Ltd.



NVIDIA Corporation



1. Intel Corp (NASDAQ:INTC): Intel Corporation is a semiconductor chip maker, which develops advanced integrated digital technology products for numerous industries such as computing and communications. Intel gained 19.4% in the year 2011. In the third quarter, the company was held by more hedge funds – 42 – than any other semiconductor chip maker. Paul Ruddock and Steve Heinz of Lansdowne Partners had the most among the hedge funds we track. The firm had approximately 23 million shares, unchanged from Q2.

2. Applied Materials (NASDAQ:AMAT): Up second comes Applied Materials, Inc., which supports the global semiconductor, flat panel display, solar photovoltaic, and other industries by providing them with manufacturing equipment, services, and software. Applied Materials lost 21.9% in the past year. The company was held by 30 portfolios in the last quarter. Ken Fisher’s Fisher Asset Management was AMAT’s largest hedge fund stakeholder at that time, with 40.2 million shares.

3. Avago Technologies Ltd (NASDAQ:AVGO): Avago is an analog semiconductor devices producer. The stock has advanced 2.9% in 2011. Twenty-nine hedge funds invested in Avago in the third quarter. Richard Chilton’s Chilton Investment Company – the largest hedge fund stakeholder of Avago – had 4.14 million shares in the stock, after a 9% increase during the third quarter.

4. Broadcom Corporation (BRCM): Broadcom Corporation is a semiconductor company for wired and wireless communications. In the past year, Broadcom had a disappointing performance and slid 31.9%. The company was held by 29 portfolios in the third quarter. Brookside Capital held nearly 6.9 million shares. The position was built during the second quarter. Glenn Russell Dubin and Ken Griffin also had large stake in Broadcom in the third quarter (see billionaire Ken Griffin’s top stock picks).

5. Micron Technology (NASDAQ:MU): Micron Technology manufactures and markets semiconductor devices including dynamic random access memory, flash memory, as well as other memory storage technologies. Micron’s loss in 2011 was 21.6%, significantly worse than the S&P 500. Twenty-eight hedge funds’ portfolios held this company in the third quarter. David Tepper’s Appaloosa Management decreased its position by 40% during the third quarter, giving the firm approximately 8.8 million shares (see billionaire David Tepper’s favorite stocks).

6. Altera Corporation (NASDAQ:ALTR): Altera Corporation is a semiconductor company, which designs, manufactures, and markets logic devices, application-specific integrated circuits, and software. Altera returned 5% and managed to beat the S&P500 in terms of return in 2011. Twenty-two portfolios held this company in the last quarter. Boykin Curry’s Eagle Capital Management increased its position in this company in the second quarter by 1%, bringing it to approximately 7.8 million shares.

7. Analog Devices, Inc. (NYSE:ADI): Analog specializes in producing analog, mixed-signal and digital signal processing integrated circuits. The stock lost 2.4% in the past year, which is worse than S&P500’s return of 2.1%. Twenty-three hedge funds had this company in their portfolios in the third quarter. William von Mueffling’s Cantillon Capital Management slightly increased its position by 2% and had 5.81 million shares in the stock as of the end of September.

8. Texas Instruments Inc. (NYSE:TXN): Texas Instruments focuses on designing and producing semiconductors. Over the past year, TXN lost 8.9%. The company was held by 23 hedge funds at the end of the third quarter. Jean-Marie Eveillard’s First Eagle Investment Management had more shares in TXN than any other hedge funds, with more than 9 million shares. That was after the firm boosted its position by 33% during Q3.

9. Marvell Technology Group Ltd. (NASDAQ:MRVL): Marvell Technology Group is a fabless semiconductor provider of application-specific products including complex system-on-a-chip (SoC) devices. Marvell lost 25.3% in the past year. The company was held by 22 portfolios in the second quarter. Artis Capital Management, which is managed by Stuart Peterson, cut its position by 4% in Q3, remaining approximately 17.9 million shares (view Stuart Peterson’s portfolio).

10. NVIDIA Corporation (NASDAQ:NVDA): NVIDIA Corporation is a provider of visual computing technologies on devices such as tablets, smart phones, notebooks, and workstations. NVIDIA lost 10% in 2011. The company was in 22 portfolios in the third quarter. David E. Shaw’s D. E. Shaw reduced its position by 13% and had 1.16 million shares.

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.