Stocks, especially the once high flying technology stocks, had a lousy start to the new year. QQQ lost 9% of its value in January. We aren’t certain about the bubbly technology stocks that trade for ridiculously high multiples of their revenues, but we believe top hedge fund stocks will deliver positive returns for the rest of the year. In this article, we will take a closer look at hedge fund sentiment towards QUALCOMM, Incorporated (NASDAQ:QCOM) at the end of the third quarter and determine whether the smart money was really smart about this stock.
Is QUALCOMM, Incorporated (NASDAQ:QCOM) going to take off soon? The smart money was taking a pessimistic view. The number of long hedge fund bets were cut by 2 lately. QUALCOMM, Incorporated (NASDAQ:QCOM) was in 70 hedge funds’ portfolios at the end of the third quarter of 2021. The all time high for this statistic is 87. Our calculations also showed that QCOM isn’t among the 30 most popular stocks among hedge funds (click for Q3 rankings). There were 72 hedge funds in our database with QCOM positions at the end of the second quarter.
David Siegel of Two Sigma Advisors
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. With all of this in mind let’s view the key hedge fund action surrounding QUALCOMM, Incorporated (NASDAQ:QCOM).
Do Hedge Funds Think QCOM Is A Good Stock To Buy Now?
Heading into the fourth quarter of 2021, a total of 70 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -3% from the second quarter of 2021. By comparison, 87 hedge funds held shares or bullish call options in QCOM 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.
Among these funds, Citadel Investment Group held the most valuable stake in QUALCOMM, Incorporated (NASDAQ:QCOM), which was worth $501 million at the end of the third quarter. On the second spot was Renaissance Technologies which amassed $462.1 million worth of shares. D E Shaw, Matrix Capital Management, and Two Sigma Advisors 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 Bronson Point Partners allocated the biggest weight to QUALCOMM, Incorporated (NASDAQ:QCOM), around 5.07% of its 13F portfolio. Matrix Capital Management is also relatively very bullish on the stock, dishing out 4.9 percent of its 13F equity portfolio to QCOM.
Seeing as QUALCOMM, Incorporated (NASDAQ:QCOM) has experienced a decline in interest from the aggregate hedge fund industry, it’s easy to see that there exists a select few hedge funds who were dropping their positions entirely last quarter. Interestingly, Peter Rathjens, Bruce Clarke and John Campbell’s Arrowstreet Capital sold off the largest position of the 750 funds monitored by Insider Monkey, totaling an estimated $77.3 million in stock, and Doug Silverman and Alexander Klabin’s Senator Investment Group was right behind this move, as the fund cut about $49.3 million worth. These transactions are intriguing to say the least, as aggregate hedge fund interest was cut by 2 funds last quarter.
Let’s now take a look at hedge fund activity in other stocks – not necessarily in the same industry as QUALCOMM, Incorporated (NASDAQ:QCOM) but similarly valued. These stocks are Citigroup Inc. (NYSE:C), Royal Bank of Canada (NYSE:RY), Lowe’s Companies, Inc. (NYSE:LOW), The Unilever Group (NYSE:UL), The Charles Schwab Corporation (NYSE:SCHW), Sony Group Corp (NYSE:SONY), and BHP Group (NYSE:BHP). This group of stocks’ market values are closest to QCOM’s market value.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| C | 79 | 5587345 | -8 |
| RY | 16 | 1103417 | -2 |
| LOW | 60 | 5080325 | -3 |
| UL | 17 | 876681 | -2 |
| SCHW | 59 | 4578571 | -13 |
| SONY | 19 | 388862 | -1 |
| BHP | 18 | 899835 | 0 |
| Average | 38.3 | 2645005 | -4.1 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 38.3 hedge funds with bullish positions and the average amount invested in these stocks was $2645 million. That figure was $3520 million in QCOM’s case. Citigroup Inc. (NYSE:C) is the most popular stock in this table. On the other hand Royal Bank of Canada (NYSE:RY) is the least popular one with only 16 bullish hedge fund positions. QUALCOMM, Incorporated (NASDAQ:QCOM) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for QCOM is 70. 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 29.6% in 2021 and still beat the market by 3.6 percentage points. Hedge funds were also right about betting on QCOM as the stock returned 36.8% since the end of Q3 (through 1/31) 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.
