The Semiconductor Stocks That Fund Managers Love And Hate

Bank of America Merrill Lynch's June semiconductor fund ownership data is bullish for several underowned stocks.

The overall June data indicates that semiconductor group weighting increased 1 percent to 1.1 times compared to the S&P 500, analyst Vivek Arya said in a Thursday report.

Semiconductor stocks are well short of their peak weighting of 1.46 times in March 2017 and are still underweight (0.9 times) compared to the rest of the tech sector, the analyst said. (See Arya's track record here.) 

Here’s a rundown of ownership and weighting trends among several popular stocks, according to BofA: 

  • Broadcom Inc AVGO and Texas Instruments Incorporated TXN are the two most over-owned and overweighted stocks in the group. Both stocks are owned by about 32 percent of funds. Broadcom has a 2.2 times weighting and Texas Instruments has a 1.8 times weighting.
  • Intel Corporation INTC has been steadily climbing, gaining 1.49 percent since last quarter and reaching 31 percent in June. Weighting remains relatively low at 0.87 times.
  • Analog Devices, Inc. ADI ownership reached 17.8 percent, its highest level yet.
  • NVIDIA Corporation NVDA ownership of 27.7 percent is second only to Intel, but its 0.87 times weighting is still relatively low.
  • Fund managers remained skeptical of Advanced Micro Devices, Inc. AMD in June. Ownership dropped to just 1.4 percent and weighting dropped to 0.04 times. Both readings were the lowest of the group.

Semiconductor stocks that have low ownership and low weightings among fund managers could be buying opportunities for traders, but Nvidia is the top pick, Arya said. 

“NVDA remains our top sector pick, and ownership levels are still well below levels of some large-cap semi and tech peers." 

Related Links:

Analyst Says Nvidia's Second-Half Outlook Is Promising

3 Reasons Why Bernstein Downgraded Intel

Posted In: Bank of AmericaVivek AryaAnalyst ColorHedge FundsAnalyst RatingsGeneral