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During the first half of the fourth quarter the Russell 2000 ETF (IWM) lagged the larger S&P 500 ETF (SPY) by about 4 percentage points as investors worried over the possible ramifications of rising interest rates. The hedge funds and institutional investors we track typically invest more in smaller-cap stocks than an average investor (i.e. only 298 S&P 500 constituents were among the 500 most popular stocks among hedge funds), and we have seen data that shows those funds paring back their overall exposure. Those funds cutting positions in small-caps is one reason why volatility has increased. In the following paragraphs, we take a closer look at what hedge funds and prominent investors think of Texas Instruments Incorporated (NASDAQ:TXN) and see how the stock is affected by the recent hedge fund activity.
Texas Instruments Incorporated (NASDAQ:TXN) was owned by 48 hedge funds at the end of the third quarter of 2018, which represented a surge of over 25% in Q3. While that wasn't enough to land TXN on our ranking of the 30 Most Popular Stocks Among Hedge Funds, it did rank 18th among the 20 Dividend Stocks That Billionaires Are Piling On. Texas Instruments carries an impressive dividend yield of 3.32% after the company's dividend payments were raised by 24% in July.
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 flagship best performing hedge funds strategy returned 17.4% year to date and outperformed the market by more than 14 percentage points this year. This strategy also outperformed the market by 3 percentage points in the fourth quarter despite the market volatility (see the details here). That's why we believe hedge fund sentiment is a useful indicator that investors should pay attention to.
How are hedge funds trading Texas Instruments Incorporated (NASDAQ:TXN)?
At the end of the third quarter, a total of 48 of the hedge funds tracked by Insider Monkey were long this stock, a 26% surge from the previous quarter. Below, you can check out the change in hedge fund sentiment towards TXN over the last 13 quarters. So, let's check out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
Among these funds, AQR Capital Management held the most valuable stake in Texas Instruments Incorporated (NASDAQ:TXN), which was worth $601.5 million at the end of the third quarter. On the second spot was Lansdowne Partners which amassed $497.1 million worth of shares. Moreover, Diamond Hill Capital, Adage Capital Management, and Millennium Management were also bullish on Texas Instruments Incorporated (NASDAQ:TXN), allocating a large percentage of their portfolios to this stock.