Before we spend countless hours researching a company, we like to analyze what insiders, hedge funds and billionaire investors think of the stock first. This is a necessary first step in our investment process because our research has shown that the elite investors’ consensus returns have been exceptional. In the following paragraphs, we find out what the billionaire investors and hedge funds think of Qorvo Inc (NASDAQ:QRVO).
Is Qorvo Inc (NASDAQ:QRVO) a worthy investment right now? Investors who are in the know are taking a pessimistic view. The number of bullish hedge fund bets were cut by 6 lately. Our calculations also showed that QRVO isn’t among the 30 most popular stocks among hedge funds (click for Q1 rankings and see the video for a quick look at the top 5 stocks).
Video: 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 monthly stock picks returned 87% since March 2017 and outperformed the S&P 500 ETFs by more than 51 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.
Seth Klarman of Baupost Group
At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, we believe electric vehicles and energy storage are set to become giant markets, and we want to take advantage of the declining lithium prices amid the COVID-19 pandemic. So we are checking out investment opportunities like this one. We interview hedge fund managers and ask them about their best ideas. If you want to find out the best healthcare stock to buy right now, you can watch our latest hedge fund manager interview here. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. Our best call in 2020 was shorting the market when the 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 take a gander at the recent hedge fund action encompassing Qorvo Inc (NASDAQ:QRVO).
What does smart money think about Qorvo Inc (NASDAQ:QRVO)?
Heading into the second quarter of 2020, a total of 39 of the hedge funds tracked by Insider Monkey were long this stock, a change of -13% from one quarter earlier. On the other hand, there were a total of 34 hedge funds with a bullish position in QRVO a year ago. With hedge funds’ positions undergoing their usual ebb and flow, there exists a select group of noteworthy hedge fund managers who were boosting their stakes meaningfully (or already accumulated large positions).
More specifically, Baupost Group was the largest shareholder of Qorvo Inc (NASDAQ:QRVO), with a stake worth $246.9 million reported as of the end of September. Trailing Baupost Group was AQR Capital Management, which amassed a stake valued at $226.4 million. Renaissance Technologies, Iridian Asset Management, and Fisher Asset 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 Scion Asset Management allocated the biggest weight to Qorvo Inc (NASDAQ:QRVO), around 11.74% of its 13F portfolio. Mondrian Capital is also relatively very bullish on the stock, designating 3.91 percent of its 13F equity portfolio to QRVO.
Due to the fact that Qorvo Inc (NASDAQ:QRVO) has experienced falling interest from the aggregate hedge fund industry, logic holds that there is a sect of hedgies that decided to sell off their full holdings by the end of the third quarter. Interestingly, Brandon Haley’s Holocene Advisors dumped the biggest position of the “upper crust” of funds monitored by Insider Monkey, comprising about $37.4 million in stock. John Hurley’s fund, Cavalry Asset Management, also cut its stock, about $33.2 million worth. These moves are important to note, as aggregate hedge fund interest was cut by 6 funds by the end of the third quarter.
Let’s check out hedge fund activity in other stocks – not necessarily in the same industry as Qorvo Inc (NASDAQ:QRVO) but similarly valued. These stocks are Varian Medical Systems, Inc. (NYSE:VAR), Suzano S.A. (NYSE:SUZ), Hologic, Inc. (NASDAQ:HOLX), and Wabtec Corporation (NYSE:WAB). All of these stocks’ market caps match QRVO’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| VAR | 25 | 439921 | -5 |
| SUZ | 3 | 27219 | -1 |
| HOLX | 41 | 866159 | 0 |
| WAB | 41 | 1405445 | 0 |
| Average | 27.5 | 684686 | -1.5 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 27.5 hedge funds with bullish positions and the average amount invested in these stocks was $685 million. That figure was $1166 million in QRVO’s case. Hologic, Inc. (NASDAQ:HOLX) is the most popular stock in this table. On the other hand Suzano S.A. (NYSE:SUZ) is the least popular one with only 3 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. Our calculations showed that top 10 most popular stocks among hedge funds returned 41.4% in 2019 and outperformed the S&P 500 ETF (SPY) by 10.1 percentage points. These stocks gained 8.3% in 2020 through the end of May but still beat the market by 13.2 percentage points. Hedge funds were also right about betting on QRVO as the stock returned 29.9% in Q2 (through the end of May) and outperformed the market. Hedge funds were rewarded for their relative bullishness.
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Disclosure: None. This article was originally published at Insider Monkey.
