We hate to say this but, we told you so. On February 27th we published an article with the title Recession is Imminent: We Need A Travel Ban NOW and predicted a US recession when the S&P 500 Index was trading at the 3150 level. We also told you to short the market and buy long-term Treasury bonds. Our article also called for a total international travel ban. While we were warning you, President Trump minimized the threat and failed to act promptly. As a result of his inaction, we will now experience a deeper recession (read our latest 10 coronavirus predictions).
In these volatile markets we scrutinize hedge fund filings to get a reading on which direction each stock might be going. Although the masses and most of the financial media blame hedge funds for their exorbitant fee structure and disappointing performance, these investors have proved to have great stock picking abilities over the years (that’s why their assets under management continue to swell). We believe hedge fund sentiment should serve as a crucial tool of an individual investor’s stock selection process, as it may offer great insights of how the brightest minds of the finance industry feel about specific stocks. After all, these people have access to smartest analysts and expensive data/information sources that individual investors can’t match. So should one consider investing in Qorvo Inc (NASDAQ:QRVO)? The smart money sentiment can provide an answer to this question.
Qorvo Inc (NASDAQ:QRVO) was in 45 hedge funds’ portfolios at the end of December. QRVO investors should pay attention to an increase in activity from the world’s largest hedge funds lately. There were 38 hedge funds in our database with QRVO holdings at the end of the previous quarter. Our calculations also showed that QRVO isn’t among the 30 most popular stocks among hedge funds (click for Q4 rankings and see the video below for Q3 rankings).
Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.
To the average investor there are numerous gauges market participants can use to appraise stocks. A duo of the most innovative gauges are hedge fund and insider trading activity. Our experts have shown that, historically, those who follow the best picks of the elite investment managers can outperform the market by a very impressive margin (see the details here).
Seth Klarman of Baupost Group
We leave no stone unturned when looking for the next great investment idea. For example we recently identified a stock that trades 25% below the net cash on its balance sheet. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences, and go through short-term trade recommendations like this one. We even check out the recommendations of services with hard to believe track records. Our best call in 2020 was shorting the market when S&P 500 was trading at 3150 after realizing the coronavirus pandemic’s significance before most investors. Keeping this in mind we’re going to analyze the key hedge fund action encompassing Qorvo Inc (NASDAQ:QRVO).
How have hedgies been trading Qorvo Inc (NASDAQ:QRVO)?
At the end of the fourth quarter, a total of 45 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 18% from the previous quarter. By comparison, 28 hedge funds held shares or bullish call options in QRVO 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.
The largest stake in Qorvo Inc (NASDAQ:QRVO) was held by Baupost Group, which reported holding $319.6 million worth of stock at the end of September. It was followed by AQR Capital Management with a $272.2 million position. Other investors bullish on the company included Renaissance Technologies, D E Shaw, and Fisher Asset Management. In terms of the portfolio weights assigned to each position Scion Asset Management allocated the biggest weight to Qorvo Inc (NASDAQ:QRVO), around 10.59% of its 13F portfolio. Cavalry Asset Management is also relatively very bullish on the stock, earmarking 4.82 percent of its 13F equity portfolio to QRVO.
As aggregate interest increased, some big names have jumped into Qorvo Inc (NASDAQ:QRVO) headfirst. Antipodes Partners, managed by Jacob Mitchell, assembled the largest position in Qorvo Inc (NASDAQ:QRVO). Antipodes Partners had $48.5 million invested in the company at the end of the quarter. John Hurley’s Cavalry Asset Management also made a $33.2 million investment in the stock during the quarter. The following funds were also among the new QRVO investors: Ken Heebner’s Capital Growth Management, Michael Burry’s Scion Asset Management, and Tor Minesuk’s Mondrian Capital.
Let’s now take a look at hedge fund activity in other stocks similar to Qorvo Inc (NASDAQ:QRVO). We will take a look at Twilio Inc. (NYSE:TWLO), Annaly Capital Management, Inc. (NYSE:NLY), HEICO Corporation (NYSE:HEI), and Cboe Global Markets, Inc. (NASDAQ:CBOE). This group of stocks’ market values match QRVO’s market value.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| TWLO | 60 | 2100922 | -3 |
| NLY | 21 | 219868 | 5 |
| HEI | 57 | 1205133 | 11 |
| CBOE | 27 | 1050257 | 1 |
| Average | 41.25 | 1144045 | 3.5 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 41.25 hedge funds with bullish positions and the average amount invested in these stocks was $1144 million. That figure was $1784 million in QRVO’s case. Twilio Inc. (NYSE:TWLO) is the most popular stock in this table. On the other hand Annaly Capital Management, Inc. (NYSE:NLY) is the least popular one with only 21 bullish hedge fund positions. Qorvo Inc (NASDAQ:QRVO) is not the most popular stock in this group but hedge fund interest is still above average. 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 20 most popular stocks among hedge funds returned 41.3% in 2019 and outperformed the S&P 500 ETF (SPY) by 10.1 percentage points. These stocks lost 22.3% in 2020 through March 16th but beat the market by 3.2 percentage points. Unfortunately QRVO wasn’t nearly as popular as these 20 stocks and hedge funds that were betting on QRVO were disappointed as the stock returned -39.2% during the same time period and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 20 most popular stocks among hedge funds as many of these stocks already outperformed the market so far this year.
Disclosure: None. This article was originally published at Insider Monkey.
