In this article we will analyze whether QUALCOMM, Incorporated (NASDAQ:QCOM) is a good investment right now by following the lead of some of the best investors in the world and piggybacking their ideas. There’s no better way to get these firms’ immense resources and analytical capabilities working for us than to follow their lead into their best ideas. While not all of these picks will be winners, our research shows that these picks historically outperformed the market by double digits annually.
QUALCOMM, Incorporated (NASDAQ:QCOM) investors should pay attention to a decrease in hedge fund interest of late. QUALCOMM, Incorporated (NASDAQ:QCOM) was in 72 hedge funds’ portfolios at the end of June. The all time high for this statistic is 87. There were 73 hedge funds in our database with QCOM positions at the end of the first quarter. Our calculations also showed that QCOM isn’t among the 30 most popular stocks among hedge funds (click for Q2 rankings).
So, why do we pay attention to hedge fund sentiment before making any investment decisions? Our research has shown that hedge funds’ small-cap stock picks managed to beat the market by double digits annually between 1999 and 2016, but the margin of outperformance has been declining in recent years. Nevertheless, we were still able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by more than 79 percentage points since March 2017 (see the details here). We have been able to outperform the passive index funds by tracking the moves of corporate insiders and hedge funds, and we believe small investors can benefit a lot from reading hedge fund investor letters and 13F filings.
John Overdeck of Two Sigma Advisors
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. Keeping this in mind let’s take a peek at the new hedge fund action regarding QUALCOMM, Incorporated (NASDAQ:QCOM).
Do Hedge Funds Think QCOM Is A Good Stock To Buy Now?
Heading into the third quarter of 2021, a total of 72 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -1% from one quarter earlier. By comparison, 74 hedge funds held shares or bullish call options in QCOM a year ago. With the smart money’s positions undergoing their usual ebb and flow, there exists a select group of notable hedge fund managers who were increasing their holdings significantly (or already accumulated large positions).
The largest stake in QUALCOMM, Incorporated (NASDAQ:QCOM) was held by D E Shaw, which reported holding $840.3 million worth of stock at the end of June. It was followed by Matrix Capital Management with a $477 million position. Other investors bullish on the company included Citadel Investment Group, Two Sigma Advisors, and Renaissance Technologies. In terms of the portfolio weights assigned to each position Shelter Haven Capital Management allocated the biggest weight to QUALCOMM, Incorporated (NASDAQ:QCOM), around 11.33% of its 13F portfolio. Matrix Capital Management is also relatively very bullish on the stock, setting aside 5.21 percent of its 13F equity portfolio to QCOM.
Because QUALCOMM, Incorporated (NASDAQ:QCOM) has faced declining sentiment from the entirety of the hedge funds we track, it’s easy to see that there were a few hedge funds who were dropping their positions entirely heading into Q3. Intriguingly, Alexander West’s Blue Pool Capital cut the largest stake of the “upper crust” of funds tracked by Insider Monkey, worth about $12.6 million in stock. Paul Tudor Jones’s fund, Tudor Investment Corp, also dropped its stock, about $10.7 million worth. These moves are intriguing to say the least, as aggregate hedge fund interest was cut by 1 funds heading into Q3.
Let’s go over hedge fund activity in other stocks – not necessarily in the same industry as QUALCOMM, Incorporated (NASDAQ:QCOM) but similarly valued. We will take a look at Pinduoduo Inc. (NASDAQ:PDD), AstraZeneca plc (NYSE:AZN), Philip Morris International Inc. (NYSE:PM), Royal Dutch Shell plc (NYSE:RDS), The Unilever Group (NYSE:UL), Honeywell International Inc. (NYSE:HON), and Linde plc (NYSE:LIN). This group of stocks’ market valuations are similar to QCOM’s market valuation.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| PDD | 49 | 5276960 | -7 |
| AZN | 37 | 2772286 | 3 |
| PM | 46 | 5973614 | -2 |
| RDS | 38 | 2444791 | 2 |
| UL | 19 | 844216 | -1 |
| HON | 57 | 1834599 | 1 |
| LIN | 55 | 5920316 | 12 |
| Average | 43 | 3580969 | 1.1 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 43 hedge funds with bullish positions and the average amount invested in these stocks was $3581 million. That figure was $4048 million in QCOM’s case. Honeywell International Inc. (NYSE:HON) is the most popular stock in this table. On the other hand The Unilever Group (NYSE:UL) is the least popular one with only 19 bullish hedge fund positions. Compared to these stocks QUALCOMM, Incorporated (NASDAQ:QCOM) is more popular among hedge funds. Our overall hedge fund sentiment score for QCOM is 78.8. 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 24.1% in 2021 through September 20th and still beat the market by 6.9 percentage points. Unfortunately QCOM wasn’t nearly as popular as these 5 stocks and hedge funds that were betting on QCOM were disappointed as the stock returned -6.7% since the end of the second quarter (through 9/20) 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.
