Most investors tend to think that hedge funds and other asset managers are worthless, as they cannot beat even simple index fund portfolios. In fact, most people expect hedge funds to compete with and outperform the bull market that we have witnessed in recent years. However, hedge funds are generally partially hedged and aim at delivering attractive risk-adjusted returns rather than following the ups and downs of equity markets hoping that they will outperform the broader market. Our research shows that certain hedge funds do have great stock picking skills (and we can identify these hedge funds in advance pretty accurately), so let’s take a glance at the smart money sentiment towards QUALCOMM, Incorporated (NASDAQ:QCOM).
QUALCOMM, Incorporated (NASDAQ:QCOM) investors should pay attention to a decrease in hedge fund sentiment recently. QUALCOMM, Incorporated (NASDAQ:QCOM) was in 72 hedge funds’ portfolios at the end of the second quarter of 2021. The all time high for this statistic is 87. There were 73 hedge funds in our database with QCOM holdings at the end of March. Our calculations also showed that QCOM isn’t among the 30 most popular stocks among hedge funds (click for Q2 rankings).
Why do we pay any attention at all to hedge fund sentiment? Our research has shown that a select group of hedge fund holdings outperformed the S&P 500 ETFs by 79 percentage points since March 2017 (see the details here). That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
David Siegel of Two Sigma Advisors
At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, the demand for helium is soaring and there is a helium supply shortage, so we are checking out stock pitches like this emerging helium 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 we’re going to check out the fresh hedge fund action encompassing QUALCOMM, Incorporated (NASDAQ:QCOM).
Do Hedge Funds Think QCOM Is A Good Stock To Buy Now?
At Q2’s end, a total of 72 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -1% from the previous quarter. Below, you can check out the change in hedge fund sentiment towards QCOM over the last 24 quarters. So, let’s examine which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
Of the funds tracked by Insider Monkey, D E Shaw, managed by D. E. Shaw, holds the biggest position in QUALCOMM, Incorporated (NASDAQ:QCOM). D E Shaw has a $840.3 million position in the stock, comprising 0.7% of its 13F portfolio. The second most bullish fund manager is Matrix Capital Management, managed by David Goel and Paul Ferri, which holds a $477 million position; the fund has 5.2% of its 13F portfolio invested in the stock. Other members of the smart money that hold long positions consist of Ken Griffin’s Citadel Investment Group, John Overdeck and David Siegel’s 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, dishing out 5.21 percent of its 13F equity portfolio to QCOM.
Judging by the fact that QUALCOMM, Incorporated (NASDAQ:QCOM) has witnessed a decline in interest from the smart money, logic holds that there were a few money managers that decided to sell off their entire stakes by the end of the second quarter. It’s worth mentioning that Alexander West’s Blue Pool Capital dropped the biggest investment of the 750 funds watched by Insider Monkey, totaling close to $12.6 million in stock. Paul Tudor Jones’s fund, Tudor Investment Corp, also cut its stock, about $10.7 million worth. These transactions are important to note, as total hedge fund interest fell by 1 funds by the end of the second quarter.
Let’s check out hedge fund activity in other stocks similar to QUALCOMM, Incorporated (NASDAQ:QCOM). These stocks are 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 caps match QCOM’s market cap.
| 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 26.3% in 2021 through October 29th and still beat the market by 2.3 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 -6.5% since the end of the second quarter (through 10/29) 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.
