Did Hedge Funds Get Skyworks Solutions Inc (SWKS) Right?

We know that hedge funds generate strong, risk-adjusted returns over the long run, which is why imitating the picks that they are collectively bullish on can be a profitable strategy for retail investors. With billions of dollars in assets, professional investors have to conduct complex analyses, spend many resources and use tools that are not always available for the general crowd. This doesn’t mean that they don’t have occasional colossal losses; they do. However, it is still a good idea to keep an eye on hedge fund activity. With this in mind, let’s examine the smart money sentiment towards Skyworks Solutions Inc (NASDAQ:SWKS) and determine whether hedge funds skillfully traded this stock.

Is Skyworks Solutions Inc (NASDAQ:SWKS) a buy, sell, or hold? The smart money was selling. The number of long hedge fund positions retreated by 1 lately. Skyworks Solutions Inc (NASDAQ:SWKS) was in 36 hedge funds’ portfolios at the end of the third quarter of 2021. The all time high for this statistic is 50. Our calculations also showed that SWKS isn’t among the 30 most popular stocks among hedge funds (click for Q3 rankings). There were 37 hedge funds in our database with SWKS 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. With all of this in mind let’s review the key hedge fund action regarding Skyworks Solutions Inc (NASDAQ:SWKS).

Kerr Neilson of Platinum Asset Management

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

At the end of September, a total of 36 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -3% from the second quarter of 2021. Below, you can check out the change in hedge fund sentiment towards SWKS over the last 25 quarters. So, let’s review which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

According to publicly available hedge fund and institutional investor holdings data compiled by Insider Monkey, Select Equity Group, managed by Robert Joseph Caruso, holds the biggest position in Skyworks Solutions Inc (NASDAQ:SWKS). Select Equity Group has a $200.7 million position in the stock, comprising 0.7% of its 13F portfolio. Sitting at the No. 2 spot is AQR Capital Management, led by Cliff Asness, holding a $142 million position; the fund has 0.3% of its 13F portfolio invested in the stock. Some other peers that are bullish contain Israel Englander’s Millennium Management, Ken Griffin’s Citadel Investment Group and Kerr Neilson’s Platinum Asset Management. In terms of the portfolio weights assigned to each position KCL Capital allocated the biggest weight to Skyworks Solutions Inc (NASDAQ:SWKS), around 2.28% of its 13F portfolio. Platinum Asset Management is also relatively very bullish on the stock, dishing out 1.85 percent of its 13F equity portfolio to SWKS.

Seeing as Skyworks Solutions Inc (NASDAQ:SWKS) has experienced declining sentiment from hedge fund managers, logic holds that there was a specific group of money managers that decided to sell off their entire stakes last quarter. It’s worth mentioning that Steve Cohen’s Point72 Asset Management cut the largest position of the “upper crust” of funds followed by Insider Monkey, valued at an estimated $35 million in stock. Suraj Parkash Chopra’s fund, Force Hill Capital Management, also dropped its stock, about $15.2 million worth. These transactions are interesting, as aggregate hedge fund interest dropped by 1 funds last quarter.

Let’s go over hedge fund activity in other stocks – not necessarily in the same industry as Skyworks Solutions Inc (NASDAQ:SWKS) but similarly valued. These stocks are Bill.com Holdings, Inc. (NYSE:BILL), Li Auto Inc. (NASDAQ:LI), Laboratory Corp. of America Holdings (NYSE:LH), UiPath Inc. (NYSE:PATH), AppLovin Corporation (NASDAQ:APP), Weyerhaeuser Co. (NYSE:WY), and Telefonica S.A. (NYSE:TEF). All of these stocks’ market caps match SWKS’s market cap.

View table here if you experience formatting issues.

As you can see these stocks had an average of 32.4 hedge funds with bullish positions and the average amount invested in these stocks was $1776 million. That figure was $806 million in SWKS’s case. Bill.com Holdings, Inc. (NYSE:BILL) is the most popular stock in this table. On the other hand Telefonica S.A. (NYSE:TEF) is the least popular one with only 5 bullish hedge fund positions. Skyworks Solutions Inc (NASDAQ:SWKS) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for SWKS is 51.4. 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 positive signal but 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 29.6% in 2021 and beat the market again by 3.6 percentage points. Unfortunately, SWKS wasn’t nearly as popular as these 5 stocks and hedge funds that were betting on SWKS were disappointed as the stock returned -10.8% since the end of September (through 1/31) 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 all of these stocks already outperformed the market since 2019.

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