Hedge Funds Are Crazy About Cirrus Logic, Inc. (CRUS)?

We know that hedge funds generate strong, risk-adjusted returns over the long run, therefore imitating the picks that they are collectively bullish on can be a profitable strategy for retail investors. With billions of dollars in assets, smart money 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 (like Melvin Capital’s recent GameStop losses). However, it is still a good idea to keep an eye on hedge fund activity. With this in mind, as the current round of 13F filings has just ended, let’s examine the smart money sentiment towards Cirrus Logic, Inc. (NASDAQ:CRUS).

Is Cirrus Logic, Inc. (NASDAQ:CRUS) going to take off soon? The best stock pickers were turning bullish. The number of long hedge fund bets advanced by 3 recently. Cirrus Logic, Inc. (NASDAQ:CRUS) was in 29 hedge funds’ portfolios at the end of the second quarter of 2021. 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 Q2 rankings). There were 26 hedge funds in our database with CRUS holdings at the end of March.

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 monthly stock picks returned 185.4% since March 2017 and outperformed the S&P 500 ETFs by more than 79 percentage points (see the details here). That’s why we believe hedge fund sentiment is a useful indicator that investors should pay attention to.

Chuck Royce of Royce & Associates

At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, lithium mining is one of the fastest growing industries right now, so we are checking out stock pitches like this emerging lithium stock. 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. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. You can subscribe to our free daily newsletter on our homepage. With all of this in mind let’s take a glance at the latest hedge fund action regarding Cirrus Logic, Inc. (NASDAQ:CRUS).

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

At the end of the second quarter, a total of 29 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 12% from the previous quarter. Below, you can check out the change in hedge fund sentiment towards CRUS over the last 24 quarters. With hedge funds’ sentiment swirling, there exists an “upper tier” of noteworthy hedge fund managers who were upping their stakes meaningfully (or already accumulated large positions).

Among these funds, Millennium Management held the most valuable stake in Cirrus Logic, Inc. (NASDAQ:CRUS), which was worth $100.6 million at the end of the second quarter. On the second spot was Royce & Associates which amassed $64.4 million worth of shares. Citadel Investment Group, Point72 Asset Management, and AQR Capital Management 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 Kettle Hill Capital Management allocated the biggest weight to Cirrus Logic, Inc. (NASDAQ:CRUS), around 3.33% of its 13F portfolio. Force Hill Capital Management is also relatively very bullish on the stock, designating 1.35 percent of its 13F equity portfolio to CRUS.

As one would reasonably expect, specific money managers have been driving this bullishness. Point72 Asset Management, managed by Steve Cohen, established the most valuable position in Cirrus Logic, Inc. (NASDAQ:CRUS). Point72 Asset Management had $40.3 million invested in the company at the end of the quarter. Joseph Samuels’s Islet Management also initiated a $31.1 million position during the quarter. The following funds were also among the new CRUS investors: Andrew Kurita’s Kettle Hill Capital Management, Dmitry Balyasny’s Balyasny Asset Management, and Michael Gelband’s ExodusPoint Capital.

Let’s now take a look at hedge fund activity in other stocks – not necessarily in the same industry as Cirrus Logic, Inc. (NASDAQ:CRUS) but similarly valued. These stocks are Park Hotels & Resorts Inc. (NYSE:PK), AppFolio Inc (NASDAQ:APPF), Selective Insurance Group, Inc. (NASDAQ:SIGI), The Hanover Insurance Group, Inc. (NYSE:THG), Agora, Inc. (NASDAQ:API), Curtiss-Wright Corp. (NYSE:CW), and Agree Realty Corporation (NYSE:ADC). This group of stocks’ market valuations are closest to CRUS’s market valuation.

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As you can see these stocks had an average of 17.1 hedge funds with bullish positions and the average amount invested in these stocks was $230 million. That figure was $451 million in CRUS’s case. Park Hotels & Resorts Inc. (NYSE:PK) is the most popular stock in this table. On the other hand Selective Insurance Group, Inc. (NASDAQ:SIGI) is the least popular one with only 14 bullish hedge fund positions. Compared to these stocks Cirrus Logic, Inc. (NASDAQ:CRUS) is more popular among hedge funds. Our overall hedge fund sentiment score for CRUS is 84.4. 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. 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 24.9% in 2021 through October 15th and still beat the market by 4.5 percentage points. Unfortunately CRUS wasn’t nearly as popular as these 5 stocks and hedge funds that were betting on CRUS were disappointed as the stock returned -5.9% since the end of the second quarter (through 10/15) 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 since 2019.

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