We are still in an overall bull market and many stocks that smart money investors were piling into surged through the end of November. Among them, Facebook and Microsoft ranked among the top 3 picks and these stocks gained 54% and 51% respectively. Hedge funds’ top 3 stock picks returned 41.7% this year and beat the S&P 500 ETFs by 14 percentage points. Investing in index funds guarantees you average returns, not superior returns. We are looking to generate superior returns for our readers. That’s why we believe it isn’t a waste of time to check out hedge fund sentiment before you invest in a stock like Cirrus Logic, Inc. (NASDAQ:CRUS).
Cirrus Logic, Inc. (NASDAQ:CRUS) has seen an increase in activity from the world’s largest hedge funds lately. Our calculations also showed that CRUS isn’t among the 30 most popular stocks among hedge funds (click for Q3 rankings and see the video below for Q2 rankings).
Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.
In the financial world there are a large number of tools investors have at their disposal to grade stocks. A pair of the most under-the-radar tools are hedge fund and insider trading indicators. We have shown that, historically, those who follow the top picks of the best fund managers can outperform the broader indices by a solid amount. Insider Monkey’s flagship best performing hedge funds strategy returned 91% since May 2014 and outperformed the Russell 2000 ETFs by nearly 40 percentage points. Our short strategy outperformed the S&P 500 short ETFs by 20 percentage points annually (see the details here). That’s why we believe hedge fund sentiment is a useful indicator that investors should pay attention to.
Joel Greenblatt of Gotham Asset Management
Unlike the largest US hedge funds that are convinced Dow will soar past 40,000 or the world’s most bearish hedge fund that’s more convinced than ever that a crash is coming, our long-short investment strategy doesn’t rely on bull or bear markets to deliver double digit returns. We only rely on the best performing hedge funds‘ buy/sell signals. We’re going to view the latest hedge fund action regarding Cirrus Logic, Inc. (NASDAQ:CRUS).
What have hedge funds been doing with Cirrus Logic, Inc. (NASDAQ:CRUS)?
At the end of the third quarter, a total of 24 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 4% from the second quarter of 2019. On the other hand, there were a total of 21 hedge funds with a bullish position in CRUS a year ago. So, let’s find out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
Among these funds, AQR Capital Management held the most valuable stake in Cirrus Logic, Inc. (NASDAQ:CRUS), which was worth $136.1 million at the end of the third quarter. On the second spot was Arrowstreet Capital which amassed $60.1 million worth of shares. Royce & Associates, D E Shaw, and GLG Partners were also very fond of the stock, becoming one of the largest hedge fund holders of the company. In terms of the portfolio weights assigned to each position Sprott Asset Management allocated the biggest weight to Cirrus Logic, Inc. (NASDAQ:CRUS), around 2.19% of its portfolio. Symmetry Peak Management is also relatively very bullish on the stock, dishing out 0.42 percent of its 13F equity portfolio to CRUS.
As industrywide interest jumped, key money managers were breaking ground themselves. Renaissance Technologies, assembled the largest position in Cirrus Logic, Inc. (NASDAQ:CRUS). Renaissance Technologies had $9.3 million invested in the company at the end of the quarter. Dmitry Balyasny’s Balyasny Asset Management also made a $8 million investment in the stock during the quarter. The other funds with new positions in the stock are Joel Greenblatt’s Gotham Asset Management, David Harding’s Winton Capital Management, and David E. Shaw’s D E Shaw.
Let’s go over hedge fund activity in other stocks similar to Cirrus Logic, Inc. (NASDAQ:CRUS). We will take a look at Liberty Latin America Ltd. (NASDAQ:LILA), Simpson Manufacturing Co, Inc. (NYSE:SSD), Liberty Latin America Ltd. (NASDAQ:LILAK), and Eldorado Resorts Inc (NASDAQ:ERI). This group of stocks’ market valuations resemble CRUS’s market valuation.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| LILA | 13 | 154267 | 2 |
| SSD | 13 | 215110 | -4 |
| LILAK | 20 | 375106 | -2 |
| ERI | 44 | 1020275 | 7 |
| Average | 22.5 | 441190 | 0.75 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 22.5 hedge funds with bullish positions and the average amount invested in these stocks was $441 million. That figure was $373 million in CRUS’s case. Eldorado Resorts Inc (NASDAQ:ERI) is the most popular stock in this table. On the other hand Liberty Latin America Ltd. (NASDAQ:LILA) is the least popular one with only 13 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. Our calculations showed that top 20 most popular stocks among hedge funds returned 37.4% in 2019 through the end of November and outperformed the S&P 500 ETF (SPY) by 9.9 percentage points. Hedge funds were also right about betting on CRUS as the stock returned 33.8% during the fourth quarter (through the end of November) and outperformed the market. Hedge funds were rewarded for their relative bullishness.
Disclosure: None. This article was originally published at Insider Monkey.
