Should I Buy MaxLinear, Inc. (MXL)?

·6 min read

Many prominent investors, including Warren Buffett, David Tepper and Stan Druckenmiller, have been cautious regarding the current bull market and missed out as the stock market reached another high in recent weeks. On the other hand, technology hedge funds weren't timid and registered double digit market beating gains. Financials, energy and industrial stocks initially suffered the most but many of these stocks delivered strong returns since November and hedge funds actually increased their positions in these stocks. In this article we will find out how hedge fund sentiment towards MaxLinear, Inc. (NYSE:MXL) changed recently.

Is MaxLinear, Inc. (NYSE:MXL) a buy, sell, or hold? Investors who are in the know were getting more bullish. The number of bullish hedge fund positions rose by 2 lately. MaxLinear, Inc. (NYSE:MXL) was in 21 hedge funds' portfolios at the end of June. The all time high for this statistic is 29. Our calculations also showed that MXL isn't among the 30 most popular stocks among hedge funds (click for Q2 rankings). There were 19 hedge funds in our database with MXL holdings at the end of March.

In the financial world there are a large number of tools investors have at their disposal to grade stocks. A pair of the most under-the-radar tools are hedge fund and insider trading indicators. We have shown that, historically, those who follow the top picks of the best fund managers can outperform the broader indices by a solid amount. Insider Monkey's monthly stock picks returned 185.4% since March 2017 and outperformed the S&P 500 ETFs by more than 79 percentage points (see the details here). That's why we believe hedge fund sentiment is a useful indicator that investors should pay attention to.

Ryan Tolkin, CIO of Schonfeld Strategic Advisors

At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, lithium mining is one of the fastest growing industries right now, so we are checking out stock pitches like this emerging lithium stock. 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. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. You can subscribe to our free daily newsletter on our homepage. Keeping this in mind we're going to go over the latest hedge fund action regarding MaxLinear, Inc. (NYSE:MXL).

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

At Q2's end, a total of 21 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 11% from one quarter earlier. Below, you can check out the change in hedge fund sentiment towards MXL over the last 24 quarters. So, let's examine which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

Is MXL A Good Stock To Buy?
Is MXL A Good Stock To Buy?

According to publicly available hedge fund and institutional investor holdings data compiled by Insider Monkey, Phill Gross and Robert Atchinson's Adage Capital Management has the largest position in MaxLinear, Inc. (NYSE:MXL), worth close to $21.7 million, comprising less than 0.1%% of its total 13F portfolio. The second largest stake is held by G2 Investment Partners Management, led by Josh Goldberg, holding a $18 million position; the fund has 3% of its 13F portfolio invested in the stock. Remaining professional money managers that are bullish comprise Ryan Tolkin (CIO)'s Schonfeld Strategic Advisors, Robert Joseph Caruso's Select Equity Group and John Overdeck and David Siegel's Two Sigma Advisors. In terms of the portfolio weights assigned to each position Boardman Bay Capital Management allocated the biggest weight to MaxLinear, Inc. (NYSE:MXL), around 6.45% of its 13F portfolio. Symmetry Peak Management is also relatively very bullish on the stock, designating 5.18 percent of its 13F equity portfolio to MXL.

As one would reasonably expect, specific money managers were leading the bulls' herd. Adage Capital Management, managed by Phill Gross and Robert Atchinson, initiated the most valuable position in MaxLinear, Inc. (NYSE:MXL). Adage Capital Management had $21.7 million invested in the company at the end of the quarter. Robert Joseph Caruso's Select Equity Group also made a $12.2 million investment in the stock during the quarter. The following funds were also among the new MXL investors: Frank Slattery's Symmetry Peak Management, Frank Slattery's Symmetry Peak Management, and Louis Navellier's Navellier & Associates.

Let's check out hedge fund activity in other stocks - not necessarily in the same industry as MaxLinear, Inc. (NYSE:MXL) but similarly valued. We will take a look at LiveRamp Holdings, Inc. (NYSE:RAMP), VEON Ltd. (NASDAQ:VEON), Copa Holdings, S.A. (NYSE:CPA), Cronos Group Inc. (NASDAQ:CRON), Independent Bank Group Inc (NASDAQ:IBTX), Equity Commonwealth (NYSE:EQC), and Globalstar, Inc. (PINK:GSAT). All of these stocks' market caps are similar to MXL's market cap.

[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position RAMP,25,331803,-1 VEON,13,51452,5 CPA,14,205970,-4 CRON,8,102753,-2 IBTX,6,70228,-3 EQC,23,159058,2 GSAT,11,166292,1 Average,14.3,155365,-0.3 [/table]

View table here if you experience formatting issues.

As you can see these stocks had an average of 14.3 hedge funds with bullish positions and the average amount invested in these stocks was $155 million. That figure was $134 million in MXL's case. LiveRamp Holdings, Inc. (NYSE:RAMP) is the most popular stock in this table. On the other hand Independent Bank Group Inc (NASDAQ:IBTX) is the least popular one with only 6 bullish hedge fund positions. MaxLinear, Inc. (NYSE:MXL) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for MXL is 68.2. 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 24% in 2021 through October 22nd and still beat the market by 1.6 percentage points. Hedge funds were also right about betting on MXL as the stock returned 24.4% since the end of Q2 (through 10/22) 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.

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