Cirrus Logic, Inc. (CRUS): Are Hedge Funds Right About This Stock?

Legendary investors such as Leon Cooperman and Seth Klarman earn enormous amounts of money for themselves and their investors by doing in-depth research on small-cap stocks that big brokerage houses don’t publish. Small cap stocks -especially when they are screened well- can generate substantial outperformance versus a boring index fund. That’s why we analyze the activity of those elite funds in these small-cap stocks. In the following paragraphs, we analyze Cirrus Logic, Inc. (NASDAQ:CRUS) from the perspective of those elite funds.

Is Cirrus Logic, Inc. (NASDAQ:CRUS) worth your attention right now? Hedge funds are in an optimistic mood. The number of long hedge fund bets improved by 5 recently. The level and the change in hedge fund popularity aren’t the only variables you need to analyze to decipher hedge funds’ perspectives. A stock may witness a boost in popularity, but it may still be less popular than similarly priced stocks. That’s why at the end of this article we will examine companies such as Cousins Properties Inc (NYSE:CUZ), Moog Inc (NYSE:MOG), and TerraForm Power Inc (NASDAQ:TERP) to gather more data points.

At the moment there are a lot of metrics stock traders employ to assess their stock investments. Two of the most useful metrics are hedge fund and insider trading indicators. We have shown that, historically, those who follow the best picks of the top fund managers can outclass the broader indices by a very impressive margin (see the details here).

Now, let’s take a peek at the recent action surrounding Cirrus Logic, Inc. (NASDAQ:CRUS).

How are hedge funds trading Cirrus Logic, Inc. (NASDAQ:CRUS)?

At Q3’s end, a total of 30 of the hedge funds tracked by Insider Monkey were long this stock, a rise of 20% from the second quarter. With hedge funds’ sentiment swirling, there exists an “upper tier” of noteworthy hedge fund managers who were boosting their holdings meaningfully (or already accumulated large positions).

According to publicly available hedge fund and institutional investor holdings data compiled by Insider Monkey, Joel Greenblatt’s Gotham Asset Management has the number one position in Cirrus Logic, Inc. (NASDAQ:CRUS), worth close to $35.9 million, comprising 0.4% of its total 13F portfolio. On Gotham Asset Management’s heels is Carlson Capital, led by Clint Carlson, holding a $22.8 million position; 0.3% of its 13F portfolio is allocated to the stock. Remaining peers that hold long positions contain Jim Simons’s Renaissance Technologies, D. E. Shaw’s D E Shaw and Israel Englander’s Millennium Management.

With a general bullishness amongst the heavyweights, key money managers have jumped into Cirrus Logic, Inc. (NASDAQ:CRUS) headfirst. Balyasny Asset Management, managed by Dmitry Balyasny, assembled the largest position in Cirrus Logic, Inc. (NASDAQ:CRUS), worth an estimated $12.8 million at the end of the quarter. Mark Coe’s Coe Capital Management also initiated a $3.2 million position during the quarter. The following funds were also among the new CRUS investors: Robert B. Gillam’s McKinley Capital Management, David Costen Haley’s HBK Investments, and Peter Algert and Kevin Coldiron’s Algert Coldiron Investors.

Let’s also examine hedge fund activity in other stocks – not necessarily in the same industry as Cirrus Logic, Inc. (NASDAQ:CRUS) but similarly valued. These stocks are Cousins Properties Inc (NYSE:CUZ), Moog Inc (NYSE:MOG), TerraForm Power Inc (NASDAQ:TERP), and Cabot Corp (NYSE:CBT). This group of stocks’ market values are closest to CRUS’s market value.

As you can see these stocks had an average of 23 hedge funds with bullish positions and the average amount invested in these stocks was $193 million. That figure was $229 million in CRUS’s case. TerraForm Power Inc (NASDAQ:TERP) is the most popular stock in this table. On the other hand Cousins Properties Inc (NYSE:CUZ) is the least popular one with only 17 bullish hedge fund positions. Cirrus Logic, Inc. (NASDAQ:CRUS) is not the most popular stock in this group, but hedge fund interest is still above average. This is a slightly positive signal, but we’d rather spend our time researching stocks that hedge funds are piling on. In this regard TERP might be a better candidate to consider a long position.