At Insider Monkey, we pore over the filings of nearly 867 top investment firms every quarter, a process we have now completed for the latest reporting period. The data we’ve gathered as a result gives us access to a wealth of collective knowledge based on these firms’ portfolio holdings as of September 30th. In this article, we will use that wealth of knowledge to determine whether or not QuantumScape Corporation (NYSE:QS) makes for a good investment right now.
QuantumScape Corporation (NYSE:QS) shareholders have witnessed a decrease in hedge fund interest lately. QuantumScape Corporation (NYSE:QS) was in 25 hedge funds’ portfolios at the end of the third quarter of 2021. The all time high for this statistic is 35. There were 26 hedge funds in our database with QS positions at the end of the second quarter. Our calculations also showed that QS isn’t among the 30 most popular stocks among hedge funds (click for Q3 rankings).
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 take a look at the recent hedge fund action encompassing QuantumScape Corporation (NYSE:QS).
Clint Carlson of Carlson Capital
Do Hedge Funds Think QS Is A Good Stock To Buy Now?
At the end of the third quarter, a total of 25 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -4% from the second quarter of 2021. The graph below displays the number of hedge funds with bullish position in QS over the last 25 quarters. So, let’s examine which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
More specifically, JS Capital was the largest shareholder of QuantumScape Corporation (NYSE:QS), with a stake worth $56.3 million reported as of the end of September. Trailing JS Capital was Citadel Investment Group, which amassed a stake valued at $47 million. Inherent Group, Soros Fund Management, and 683 Capital 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 JS Capital allocated the biggest weight to QuantumScape Corporation (NYSE:QS), around 3.26% of its 13F portfolio. Inherent Group is also relatively very bullish on the stock, setting aside 2.54 percent of its 13F equity portfolio to QS.
Due to the fact that QuantumScape Corporation (NYSE:QS) has experienced a decline in interest from hedge fund managers, we can see that there exists a select few funds who sold off their entire stakes last quarter. Interestingly, George Soros’s Soros Fund Management cut the largest position of the “upper crust” of funds watched by Insider Monkey, valued at about $47.1 million in stock. Mark Hart III’s fund, Corriente Advisors, also said goodbye to its stock, about $9.9 million worth. These moves are intriguing to say the least, as total hedge fund interest dropped by 1 funds last quarter.
Let’s also examine hedge fund activity in other stocks – not necessarily in the same industry as QuantumScape Corporation (NYSE:QS) but similarly valued. We will take a look at CureVac N.V. (NASDAQ:CVAC), First Solar, Inc. (NASDAQ:FSLR), Brookfield Renewable Partners L.P. (NYSE:BEP), Magellan Midstream Partners, L.P. (NYSE:MMP), Service Corporation International (NYSE:SCI), On Holding AG (NYSE:ONON), and RPM International Inc. (NYSE:RPM). This group of stocks’ market caps resemble QS’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| CVAC | 10 | 45690 | -2 |
| FSLR | 31 | 266584 | 0 |
| BEP | 17 | 145164 | -3 |
| MMP | 12 | 92094 | -1 |
| SCI | 25 | 389692 | 1 |
| ONON | 30 | 832579 | 30 |
| RPM | 20 | 80551 | -2 |
| Average | 20.7 | 264622 | 3.3 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 20.7 hedge funds with bullish positions and the average amount invested in these stocks was $265 million. That figure was $197 million in QS’s case. First Solar, Inc. (NASDAQ:FSLR) is the most popular stock in this table. On the other hand CureVac N.V. (NASDAQ:CVAC) is the least popular one with only 10 bullish hedge fund positions. QuantumScape Corporation (NYSE:QS) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for QS is 61.1. 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. 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 31.1% in 2021 through December 9th and beat the market again by 5.1 percentage points. Unfortunately QS wasn’t nearly as popular as these 5 stocks and hedge funds that were betting on QS were disappointed as the stock returned -0.9% 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 many of these stocks already outperformed the market since 2019.
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Disclosure: None. This article was originally published at Insider Monkey.
