Cirrus Logic, Inc. (CRUS) Fell Out Of Favor With Hedge Funds

In this article we will take a look at whether hedge funds think Cirrus Logic, Inc. (NASDAQ:CRUS) is a good investment right now. We check hedge fund and billionaire investor sentiment before delving into hours of research. Hedge funds spend millions of dollars on Ivy League graduates, unconventional data sources, expert networks, and get tips from investment bankers and industry insiders. Sure they sometimes fail miserably, but their consensus stock picks historically outperformed the market after adjusting for known risk factors.

Is Cirrus Logic, Inc. (NASDAQ:CRUS) a safe investment now? Money managers were cutting their exposure. The number of bullish hedge fund bets went down by 4 recently. Cirrus Logic, Inc. (NASDAQ:CRUS) was in 25 hedge funds’ portfolios at the end of September. The all time high for this statistic is 33. Our calculations also showed that CRUS isn’t among the 30 most popular stocks among hedge funds (click for Q3 rankings). There were 29 hedge funds in our database with CRUS holdings at the end of June.

At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, lithium prices have more than doubled over the past year, so we go through lists like the 10 best EV stocks to pick the next Tesla that will deliver a 10x return. Even though we recommend positions in only a tiny fraction of the companies we analyze, we check out as many stocks as we can. Now we’re going to view the fresh hedge fund action surrounding Cirrus Logic, Inc. (NASDAQ:CRUS).

Bruce Kovner of Caxton Associates LP

Do Hedge Funds Think CRUS Is A Good Stock To Buy Now?

At the end of September, a total of 25 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -14% from one quarter earlier. By comparison, 26 hedge funds held shares or bullish call options in CRUS a year ago. With hedge funds’ sentiment swirling, there exists a select group of notable hedge fund managers who were adding to their stakes significantly (or already accumulated large positions).

When looking at the institutional investors followed by Insider Monkey, Millennium Management, managed by Israel Englander, holds the number one position in Cirrus Logic, Inc. (NASDAQ:CRUS). Millennium Management has a $64.9 million position in the stock, comprising less than 0.1%% of its 13F portfolio. The second largest stake is held by Chuck Royce of Royce & Associates, with a $63.8 million position; 0.5% of its 13F portfolio is allocated to the stock. Other peers that are bullish encompass Steve Cohen’s Point72 Asset Management, Cliff Asness’s AQR Capital Management and Ben Levine, Andrew Manuel and Stefan Renold’s LMR Partners. In terms of the portfolio weights assigned to each position Force Hill Capital Management allocated the biggest weight to Cirrus Logic, Inc. (NASDAQ:CRUS), around 1.67% of its 13F portfolio. Neo Ivy Capital is also relatively very bullish on the stock, earmarking 0.52 percent of its 13F equity portfolio to CRUS.

Judging by the fact that Cirrus Logic, Inc. (NASDAQ:CRUS) has faced declining sentiment from the entirety of the hedge funds we track, we can see that there was a specific group of money managers who sold off their full holdings last quarter. Intriguingly, Joseph Samuels’s Islet Management sold off the biggest stake of the “upper crust” of funds tracked by Insider Monkey, worth close to $31.1 million in stock, and Andrew Kurita’s Kettle Hill Capital Management was right behind this move, as the fund dropped about $18.8 million worth. These moves are interesting, as total hedge fund interest dropped by 4 funds last quarter.

Let’s now review hedge fund activity in other stocks similar to Cirrus Logic, Inc. (NASDAQ:CRUS). We will take a look at Foot Locker, Inc. (NYSE:FL), Lazard Ltd (NYSE:LAZ), Ionis Pharmaceuticals, Inc. (NASDAQ:IONS), Cloudera, Inc. (NYSE:CLDR), Fastly, Inc. (NYSE:FSLY), Travel + Leisure Co. (NYSE:TNL), and Atotech Limited (NYSE:ATC). This group of stocks’ market caps match CRUS’s market cap.

View table here if you experience formatting issues.

As you can see these stocks had an average of 25 hedge funds with bullish positions and the average amount invested in these stocks was $803 million. That figure was $324 million in CRUS’s case. Travel + Leisure Co. (NYSE:TNL) is the most popular stock in this table. On the other hand Fastly, Inc. (NYSE:FSLY) is the least popular one with only 17 bullish hedge fund positions. Cirrus Logic, Inc. (NASDAQ:CRUS) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for CRUS is 48.7. Stocks with higher number of hedge fund positions relative to other stocks as well as relative to their historical range receive a higher sentiment score. This is a slightly negative signal and we’d rather spend our time researching stocks that hedge funds are piling on. Our calculations showed that top 5 most popular stocks among hedge funds returned 95.8% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 40 percentage points. These stocks gained 31.1% in 2021 through December 9th and surpassed the market again by 5.1 percentage points. Unfortunately CRUS wasn’t nearly as popular as these 5 stocks (hedge fund sentiment was quite bearish); CRUS investors were disappointed as the stock returned 7.6% since the end of September (through 12/9) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 5 most popular stocks among hedge funds as most of these stocks already outperformed the market in 2021.

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Disclosure: None. This article was originally published at Insider Monkey.