Vivek Arya, a BofA analyst has examined the holdings of US hedge-fund active managers. The focus was on semiconductor stocks.

Arya targeted breadth (how much of the sample set is owned) and depth (how large of portfolios are owned relative stock weight in ) in order to find stocks that would benefit from more ownership.

Nvidia (NASDAQ 🙂 has the largest stock ownership, with 51.5% of its fund managers. However, this is lower than the broader semis peer group, which indicates that current owners still have room to grow their exposure.

Texas Instruments is another semi stock that has a high level of ownership (39%) and a low relative weight (now at the lowest ever recorded). TXN has the same ownership level as Qualcomm (NASDAQ) but with a 25% decrease in relative weighting YoY.

Broadcom (NASDAQ;), Advanced Micro Devices Inc. (NASDAQ:), Micron (NASDAQ 🙂 and Micron are also less well-known than their smaller peers with smaller market caps.

We see the potential for increased ownership breadth in AVGO and AMD, which, despite having large market caps of 200bn+, are only owned by 21%/30% respectively. This is lower than peers with smaller market caps. AVGO has a smaller number of investors, but a higher concentration (concentration at 1.9x above the semis average), while AMD’s weighting is 0.96x. This presents an opportunity to expand its depth. A client note by Arya also revealed that only 14% funds own MU, an amount below the mkt-cap peers. However, MU’s 1.21x depth of ownership is significantly higher than its counterparts, and is therefore more QoQ (and second most YoY).

KLA-Tencor Corporation and Microchip could both benefit from an increase in ownership.

By Senad Karaahmetovic