Institutions are welcoming back Applied Materials (AMAT) as signs emerge that the worst might be over for the chip name.
According to FactSet data, institutions, and in particular active investors, have been selling the California-based semiconductor equipment stock in droves since late 2017, but have recently tempered off and changed gears.
Third quarter and early fourth-quarter data from FactSet mark the first net positive trading action in the past year. That sign may indicate that many investors feel the worst is over for the stock, which has fallen almost 40% in the past year.
Additionally, the strong selling ran the stock well into oversold territory earlier this month based on the Relative Strength Index, which has since reversed as buying has picked up a bit.
The data suggest that investors might be betting there is room for a recovery. Growth investors in particular are warming to the shares, according to FactSet, alongside index providers and "growth-at-a-reasonable-price" investors.
To be sure, a recovery is not certain.
As Real Money's technical analyst Bruce Kamich points out, there might be more room to fall for the struggling semiconductor name.
"AMAT has made a big correction from its high back in March," he acknowledged in his column. "But I find no technical reasons to go long here and with a downside Point and Figure price objective of $16, I would look for opportunities elsewhere."
Investors interested in a turnaround at Applied Materials will likely want to hedge their risk, given the possibility of a serious price cut at the chipmaker.
For now, though, the movement of large investors likely suggests that the recent slide has made the shares more worth the risk than not.