In this article we will analyze whether ON Semiconductor Corporation (NASDAQ:ON) is a good investment right now by following the lead of some of the best investors in the world and piggybacking their ideas. There’s no better way to get these firms’ immense resources and analytical capabilities working for us than to follow their lead into their best ideas. While not all of these picks will be winners, our research shows that these picks historically outperformed the market by double digits annually.
ON Semiconductor Corporation (NASDAQ:ON) was in 41 hedge funds’ portfolios at the end of September. The all time high for this statistic is 45. ON shareholders have witnessed a decrease in hedge fund interest lately. There were 44 hedge funds in our database with ON holdings at the end of June. Our calculations also showed that ON isn’t among the 30 most popular stocks among hedge funds (click for Q3 rankings).
Richard Driehaus of Driehaus Capital
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 let’s analyze the fresh hedge fund action regarding ON Semiconductor Corporation (NASDAQ:ON).
Do Hedge Funds Think ON Is A Good Stock To Buy Now?
At third quarter’s end, a total of 41 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -7% from the previous quarter. By comparison, 29 hedge funds held shares or bullish call options in ON a year ago. So, let’s examine which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
The largest stake in ON Semiconductor Corporation (NASDAQ:ON) was held by Starboard Value LP, which reported holding $381.6 million worth of stock at the end of September. It was followed by Crake Asset Management with a $110.4 million position. Other investors bullish on the company included Renaissance Technologies, GLG Partners, and CaaS Capital. In terms of the portfolio weights assigned to each position Starboard Value LP allocated the biggest weight to ON Semiconductor Corporation (NASDAQ:ON), around 6.98% of its 13F portfolio. Albar Capital is also relatively very bullish on the stock, dishing out 6.86 percent of its 13F equity portfolio to ON.
Because ON Semiconductor Corporation (NASDAQ:ON) has witnessed bearish sentiment from hedge fund managers, it’s easy to see that there is a sect of money managers who sold off their positions entirely in the third quarter. It’s worth mentioning that Robert Boucai’s Newbrook Capital Advisors dumped the biggest investment of the 750 funds followed by Insider Monkey, comprising about $75.5 million in stock, and Dmitry Balyasny’s Balyasny Asset Management was right behind this move, as the fund dropped about $39 million worth. These transactions are important to note, as total hedge fund interest was cut by 3 funds in the third quarter.
Let’s now take a look at hedge fund activity in other stocks – not necessarily in the same industry as ON Semiconductor Corporation (NASDAQ:ON) but similarly valued. These stocks are Cheniere Energy Partners LP (NYSE:CQP), Ulta Beauty, Inc. (NASDAQ:ULTA), Trip.com Group Limited (NASDAQ:TCOM), Insulet Corporation (NASDAQ:PODD), AMC Entertainment Holdings Inc (NYSE:AMC), DraftKings Inc. (NASDAQ:DKNG), and FirstEnergy Corp. (NYSE:FE). This group of stocks’ market values resemble ON’s market value.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| CQP | 3 | 10790 | 1 |
| ULTA | 42 | 935547 | 2 |
| TCOM | 36 | 1794035 | -5 |
| PODD | 32 | 1318310 | -6 |
| AMC | 17 | 252354 | -4 |
| DKNG | 28 | 1326732 | 2 |
| FE | 38 | 1479736 | 2 |
| Average | 28 | 1016786 | -1.1 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 28 hedge funds with bullish positions and the average amount invested in these stocks was $1017 million. That figure was $1252 million in ON’s case. Ulta Beauty, Inc. (NASDAQ:ULTA) is the most popular stock in this table. On the other hand Cheniere Energy Partners LP (NYSE:CQP) is the least popular one with only 3 bullish hedge fund positions. ON Semiconductor Corporation (NASDAQ:ON) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for ON is 78.1. 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. 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 28.6% in 2021 through November 30th and still beat the market by 5.6 percentage points. Hedge funds were also right about betting on ON as the stock returned 34.2% since the end of Q3 (through 11/30) and outperformed the market. Hedge funds were rewarded for their relative bullishness.
Follow On Semiconductor Corp (NASDAQ:ON)
Follow On Semiconductor Corp (NASDAQ:ON)
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Disclosure: None. This article was originally published at Insider Monkey.
