Is Lam Research Corporation (NASDAQ:LRCX) a good investment?
If you were to ask many traders, hedge funds are perceived as useless, outdated investment vehicles of a period lost to current times. Although there are more than 8,000 hedge funds trading in present day, Insider Monkey aim at the moguls of this club, about 525 funds. It is assumed that this group has its hands on most of all hedge funds’ total assets, and by monitoring their best stock picks, we’ve spotted a few investment strategies that have historically outpaced Mr. Market. Our small-cap hedge fund strategy outperformed the S&P 500 index by 18 percentage points a year for a decade in our back tests, and since we’ve started sharing our picks with our subscribers at the end of August 2012, we have trumped the S&P 500 index by 33 percentage points in 11 months (see all of our picks from August).
Equally as key, bullish insider trading activity is another way to look at the stock market universe. Obviously, there are a number of stimuli for a corporate insider to drop shares of his or her company, but just one, very clear reason why they would buy. Plenty of empirical studies have demonstrated the valuable potential of this method if investors know where to look (learn more here).
Thus, let’s analyze the latest info for Lam Research Corporation (NASDAQ:LRCX).
What does the smart money think about Lam Research Corporation (NASDAQ:LRCX)?
At the end of the second quarter, a total of 40 of the hedge funds we track were bullish in this stock, a change of 38% from one quarter earlier. With hedgies’ sentiment swirling, there exists a few notable hedge fund managers who were increasing their holdings substantially.
Out of the hedge funds we follow, Eric Bannasch’s Cadian Capital had the most valuable position in Lam Research Corporation (NASDAQ:LRCX), worth close to $143.7 million, comprising 4.4% of its total 13F portfolio. Sitting at the No. 2 spot is Harris Associates, managed by Natixis Global Asset Management, which held a $82.9 million position; the fund has 0.2% of its 13F portfolio invested in the stock. Other hedge funds that hold long positions include Lee Ainslie’s Maverick Capital, Jim Simons’s Renaissance Technologies and Michael Novogratz’s Fortress Investment Group.
Now, particular hedge funds have jumped into Lam Research Corporation (NASDAQ:LRCX) headfirst. Cadian Capital, managed by Eric Bannasch, established the most outsized position in Lam Research Corporation (NASDAQ:LRCX). Cadian Capital had 143.7 million invested in the company at the end of the quarter. Lee Ainslie’s Maverick Capital also made a $72.6 million investment in the stock during the quarter. The other funds with new positions in the stock are Howard Marks’s Oaktree Capital Management, Jim Simons’s Renaissance Technologies, and Michael Novogratz’s Fortress Investment Group.
How are insiders trading Lam Research Corporation (NASDAQ:LRCX)?
Legal insider trading, particularly when it’s bullish, is most useful when the primary stock in question has seen transactions within the past 180 days. Over the latest 180-day time frame, Lam Research Corporation (NASDAQ:LRCX) has seen zero unique insiders purchasing, and zero insider sales (see the details of insider trades here).
We’ll also take a look at the relationship between both of these indicators in other stocks similar to Lam Research Corporation (NASDAQ:LRCX). These stocks are United Microelectronics Corp (ADR) (NYSE:UMC), KLA-Tencor Corporation (NASDAQ:KLAC), Synopsys, Inc. (NASDAQ:SNPS), Advanced Semiconductor Engineering (ADR) (NYSE:ASX), and Cree, Inc. (NASDAQ:CREE). This group of stocks are the members of the semiconductor equipment & materials industry and their market caps match LRCX’s market cap.
| Company Name | # of Hedge Funds | # of Insiders Buying | # of Insiders Selling |
| United Microelectronics Corp (ADR) (NYSE:UMC) | 13 | 0 | 0 |
| KLA-Tencor Corporation (NASDAQ:KLAC) | 30 | 0 | 0 |
| Synopsys, Inc. (NASDAQ:SNPS) | 23 | 0 | 0 |
| Advanced Semiconductor Engineering (ADR) (NYSE:ASX) | 9 | 0 | 0 |
| Cree, Inc. (NASDAQ:CREE) | 20 | 0 | 0 |
Using the returns explained by the previously mentioned research, regular investors must always watch hedge fund and insider trading activity, and Lam Research Corporation (NASDAQ:LRCX) shareholders fit into this picture quite nicely.
